World Bank Foresees PNA's Budget Deficit Reaches $1 Billion

2006-01-23

www.ipc.gov.ps/ ipc_new/english/ details.asp?name=13119

GAZA, Palestine, January 23, 2006 (IPC+Agencies) -[Official PA website] -The World Bank expected that the PNA's Budget deficit to reach $1 billion by 2006 due the wages inflammation in Government sector.

Thus so far the Palestinian National Authority is facing a cute financial crisis on the eve of the Palestinian PLC election that could unable it, as early as next month, from paying the salaries of at least 130.000 officials and members of its security forces

The President Mahmoud Abbas acknowledged the crisis saying "we are going through a suffocating financial crisis. Unemployment is the cause of the crisis because when we employ those unemployed people, wages are increased and donors suspended finances."

The European Union announced this week EU decided on Tuesday to suspend 35 million euros ($42 million) in aid to the Palestinian National Authority (PNA) at a behest of the World Bank, citing the lake of budgetary discipline.

The Economist Salah Aabed Al Shafi, Ex-consultant of the World Bank opined "the PNA is the biggest employment sector in OPT and it was obliged to recruit the armed groups in its institutions to contain them and lull looseness. "

Abed Al Shafi added "we are revolving in a vacant loop, the closure imposed by Israeli and lawlessness Palestinian territories dissuade the investors to invest money in economic projects, thus the only sector for employment is the public sector, deepening the financial deficit."

The former representative of the World Bank and the occupied Palestinian Territories Nigel Roberts, told Israeli online daily Haaretz on January 10 that the PNA's lack of responsibility "forced the Bank, supported by the European Commission," to freeze 60 percent of funding the PNA's operational budget.

This far-reaching step was taken because the Palestinians did not fulfill their commitments on "budget control," he said, adding that the PNA raised salaries "at a time when resources are unavailable."

However Roberts warned also that the PNA "is facing a crisis." The PNA "is on the verge of functional bankruptcy; its failure to pay the hundreds of thousands of employees will make them unable to buy their basis daily needs, which will directly affect thousands of suppliers and merchants who earn their living from the employees," he added.

Roberts noted that the amount of assistance the PNA is getting - reportedly $5 billion in five years, or $300 per capita annually - is the highest granted to any entity since World War II.

"To maintain the deep involvement of the donors, and their diplomatic attention, as well as the desire of the private sector to invest additional money, the PA must improve its performance," he said.

Source: IMRA – Independent Media Review and Analysis