Palestinian Authority Financial Crisis

What are the choices provided for PA to face its critical financial crisis?

What are the choices provided for PA to face its critical financial crisis?

Palestinians receiving their salaries

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Gaza Post- Palestinian Authority 

Written by: Rewaa Abu Helow

 

Palestinian Authority has been trying since several months to find a solution to manage its tax revenues' crisis after Israel had approved a new legal draft to confiscate amounts of these revenues claiming these amounts go to families of terrorist prisoners and martyrs.

Azzam al-Shawa, the Palestinian Monetary Authority's governor, revealed on Friday that the Banking System is trying to find "non-conventional" solutions to manage the financial crisis facing the Palestinian Authority.

Palestinian businessmen are taking an initiative to mobilize a loan of $ 150 million to PA to overcome the current crisis, Anadolu Agency reported.

Al-Shawa pointed out that PA has agreed with Palestinian businessmen and other Arabs to invest their money by depositing part of it in the Palestinian banking sector, noting that the sector's total assets are estimated by $ 15.5 billion, the deposits are $ 12.6 billion and the credits facilities are $ 8.6 billion.

They are planning to issue bonds with a certain mechanism to provide financial liquidity, al-Shawa said.

He added, "The Banks along with the Deposit Guarantee Corporation and the Monetary Authority are responsible for the security of customers' deposits.

Palestinian banks have faced financial pressures as a result of the revenues cut. As a response to that, they have tried to overcome the crisis with its maximum capacities.

"Palestinian banks' employers have borne our pressure, in addition to the coming pressure of the government." al-Shawa pointed out. Adding, "As Palestinians, we don't want to get out of the crisis as losers. What we had lost in the past is really enough."

Furthermore, the banks have been giving loans to the government since the beginning of the crisis last February. Each bank gives loans according to its ability in a way that doesn't negatively affect its financial operations and its customers' deposits.  

 The banks give loans with a monthly total value of between $ 40-50 million since March 2019.

The Palestinian government's loans for the operating banks will be estimated by $ 400 to 500 million until the next October.  

Israel approved and carried out its decision on February 17 to deduct a monthly amount of $ 11.3 million from the PA's revenues. As a result, Palestinian Authority rejected to receive the full amounts of its revenues funds.

it is important to mention that the Palestinian tax revenues form  the main source of Palestinian employees' wages, and without it, the government will not be able to meet its obligations for its employees and institutions.

In February and March, public employees in Palestine, estimated by 133.2 thousands, received 50% of their salaries and 60% during April and May, 2019.

Palestinian Authority is currently depending on the domestic revenues including taxes and governmental transaction fees, local banks' loans, and other external financial grants to provide the financial liquidity.

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