The deficit in the Palestinian Authority’s 2012 budget has reached more than $1 billion, Finance Minister Nabil Qassis revealed Wednesday.

He said that a decrease in foreign aid and failure of donor countries to fulfill their financial pledges to the PA were behind the severe crisis hitting the government.

Qassis told Palestinian legislators in Ramallah that the PA has reached understandings with Israel on ways of combating tax evasion.

He was referring to an agreement that was signed Tuesday between Finance Minister Yuval Steinitz and PA Prime Minister Salam Fayyad about broadening economic cooperation and improving tax collection on goods which the PA imports through Israel.

The agreement also calls for setting up a pipeline to transport fuel directly from Israeli ports to the PA. Until now, fuel had been transferred to the PA territories by trucks.

Qassis said that tax collection in the PA territories has been below expectations. He said that the main reason for the financial crisis was the state of uncertainty regarding foreign aid to the PA.

“Without foreign aid, the Palestinian Authority can’t cover its expenses,” he added.

Referring to last week’s report by the World Bank, which said that the Palestinian economy was still unsustainable, Qassis blamed Israel, saying: “If anyone thinks that our economy would be able to sustain itself under occupation, they are deluding themselves. We don’t even control our national resources.”

He said that a recent $100 million grant from Saudi Arabia has been used to pay the salaries of the public sector employees.

Please LIKE our Facebook page - it makes us stronger