Israeli loan to PA questioned as documents show increase in PA revenue

Israel granted the PA a loan of $227 million in April on humanitarian grounds, but documents show the PA's revenue increased by $355 million in the first quarter of 2020, against the previous year.

Palestinian Authority President Mahmoud Abbas wears a protective face mask during a leadership meeting in Ramallah on May 19, 2020 (photo credit: REUTERS)
Palestinian Authority President Mahmoud Abbas wears a protective face mask during a leadership meeting in Ramallah on May 19, 2020
(photo credit: REUTERS)
Questions are being raised over a decision by the Israeli government to grant the Palestinian Authority a substantial loan to deal with the financial fallout of the coronavirus epidemic, after it emerged that the PA budget increased in the first quarter of 2020, against the same quarter over the previous two years.
Senior PA officials have been warning that the PA faced a severe financial crisis since the outbreak of the pandemic, citing a reduction in aid as nations tightened their own budgets and reduced taxation income as the economy slowed.
In late March, PA Prime Minister Muhammad Shtayyeh said “the [PA] government’s revenues will drop by more than 50%, and the international aid will decrease,” according to WAFA, the official PA news agency.
Those claims prompted donor entities to allocate significant aid budgets to the PA to help with the financial impact of the coronavirus. Among others, the European Union pledged €71 million, while Israel approved a loan of $227m.
But analysis of the PA’s budgetary documents by Palestinian Media Watch (PMW) revealed that, far from facing a significant shortfall, the PA’s revenues increased by 47% in the first quarter of 2020 as compared to 2019, amounting to some $355m.
Commenting on Israel’s decision to grant the loan, PMW Director of Legal Strategies Maurice Hirsch told The Jerusalem Post: “There is no possible excuse that could explain the decision to provide the PA with such a huge loan.”
According to PMW, financial reports published by the PA Ministry of Finance show that in 2018, the PA’s revenue was NIS 3,661,200,000. In 2019 this fell back to NIS 2,597,200,000, largely due to the PA’s refusal to receive tax money collected on its behalf under the Oslo Accords in protest of the Israeli government’s passing the anti-Pay for Slay law.
However, the first quarter figure for 2020 is NIS 3,823,700,000, an increase even upon the 2018 figure before the tax boycott was implemented.
Despite this, in mid-April the Israeli government approved a loan to the PA of $227m. to help manage the coronavirus pandemic in the West Bank on the grounds that an outbreak in the region would cause a crisis on Israel’s doorstep.
“The situation with [coronavirus] in the West Bank worries us all and could cause a humanitarian crisis,” Finance Minister Moshe Khalon (Likud) said after he met with President Reuven Rivlin and UN Special Coordinator to the Middle East Peace Process Nickolay Mladenov.
Mladenov later tweeted: “Very encouraging meeting with @KahlonMoshe on the steps that #Israel is taking in coordination with the #Palestinian Authority to alleviate the negative socio-economic impact of #COVID19. #UN has called on all sides to cooperate in a time of crisis.”
At the time, the World Bank estimated that the PA needed $120m. to deal with the medical needs arising from coronavirus, and that PA debt could exceed $1b. They highlighted that prior to the pandemic, 24% of Palestinians were living below the poverty line, and a quarter were unemployed, a situation which would only be exacerbated by COVID-19.
However, as of Friday afternoon, the West Bank and Gaza combined have had 423 cases of coronavirus in total, of which 346 have recovered and two have died, according to figures from the John Hopkins coronavirus resource center.
Meanwhile, the PA not only met the monthly salary payments given to terrorists and the families of those killed while carrying out attacks, but prioritized them ahead of welfare payments and the salaries of schoolteachers and other public workers.
“The actions of the PA over the last few months have shown, over and over, that it is determined to continue attacking Israel and Israelis, while all the time paying huge cash rewards to terrorists,” Hirsch told the Post.
“Even if the PA is suffering a financial slowdown, like the rest of the world, as a result of the coronavirus pandemic, before Israel steps to its aid, the PA should first be required to stop its incitement and refrain from squandering hundreds of millions of shekels paying its cash rewards to terrorist.”
Tovah Lazaroff and Eytan Halon contributed to this report.