PA officials tell 'Post': PA on brink of bankruptcy

Top PA officials say Arab countries failing to meet financial commitments as Hamas's coffers grow.

Abbas Fayad 248.88 (photo credit: AP [file])
Abbas Fayad 248.88
(photo credit: AP [file])
The Palestinian Authority is facing a severe financial crisis due to the failure of donor countries to fulfill their pledges to fund the Palestinians, PA officials in Ramallah said Monday. The officials told The Jerusalem Post that the PA wouldn't be able to pay July salaries to more than 150,000 public servants and may be forced to close down several government institutions as a result of the deepening crisis. The officials disclosed that the deficit in the PA budget has risen in the past six months from $1.6 billion to $2b. "We are facing a real crisis," a top PA official told the Post, adding "we are on the brink of bankruptcy." Another PA official warned that the financial crisis would undermine the PA and limit its ability to reach a peace agreement with Israel. "We will lose the support of the Palestinian public if we stop paying salaries to our civil servants and policemen," he said. "This is happening at a time when Hamas is receiving large sums from Iran and radical Islamic groups." PA Prime Minister Salaam Fayad expressed concern that the PA could face a financial crisis if the donor countries, particularly some Arab states, failed to transfer to the PA treasury the funds they had pledged to donate at the Paris conference. Fayad described the financial situation of the PA as "difficult," adding that his government was making enormous efforts to provide the necessary money to pay salaries to its employees. The Palestinian Economic Council for Development and Reconstruction [PECDAR] said Monday that the PA had received only $900m. of the $7.7b. promised during the December 2007 Paris Donors' Conference for supporting the Palestinians. The money was promised to the PA over a period of three years by nearly 90 countries and international organizations during the Paris conference. According to PECDAR, the PA was supposed to receive up to $3b. of it during 2008. However, PA officials complained that that the donors had so far paid less than 35 percent of the promised sum. The officials said they were particularly disappointed with the majority of the Arab countries for failing to meet their financial commitments toward the Palestinians. "Most of the Arab countries are now setting conditions for providing us with financial aid," the PA officials said. "Some are saying that they will give us the money only after we end our differences with Hamas, while others are suddenly talking about the need for reforms and transparency in the Palestinian Authority." The officials pointed out that the Arab countries have given the PA this year about 15% of what they promised. Saudi Arabia, which had pledged at least $500m. over the three-year period, gave the PA less than 20% of the funds. Kuwait, which pledged $80m. in aid to the PA this year, has yet to fulfill its promise, the officials said. Qatar, which used to provide the PA with more than $200m. annually, stopped channeling the funds after the collapse of the Fatah-Hamas unity government. Most of the Arab countries have told the PA that they prefer to support vital economic projects in the West Bank and Gaza Strip rather than day-to-day government operations, a move that has drawn sharp criticism from the PA leadership. "The crisis in the Palestinian territories is likely to aggravate because most of the foreign donors are not living up to their commitments," said Samir Abdullah, the Minister of Planning in the PA government. "The government needs at least 200m. every month, half of which goes to paying salaries." Meanwhile, the number of households in the Gaza Strip below the poverty line has reached an unprecedented high of nearly 52%, the United Nations Relief and Works Agency (UNRWA) said in a report published recently. "The number of households in Gaza below the consumption poverty line continued to grow, reaching 51.8% in 2007, despite significant amounts of emergency and humanitarian assistance," the UNRWA statement said. Meanwhile, poverty rates in the West Bank fell to just over 19%. The report, based on figures provided by the Palestinian Central Bureau of Statistics (PCBS), said that "the real average unemployment rate in the occupied Palestinian territory (as a whole) remained amongst the highest in the world at 29.5%," with Gaza reaching "an unprecedented high of 45.3%" during the second half of last year. The report added that Palestinian youth were most affected by the fledgling economy, with members of the 15-24 age group "least likely to gain employment and the most prone to increased unemployment." "If you deprive young people of an economic future, you deprive them of hope, and when hope vanishes, what is left? How better to prevent despair and economic misery taking hold of a whole generation than to re-open Gaza's borders?" said UNRWA spokesman Christopher Gunness. The report concluded that "Israeli-imposed movement restrictions in the occupied Palestinian territory, whose population is estimated to have grown by about one third since 1999, have resulted in considerable regression over the past eight years and remain the main barrier to economic recovery and development."