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Palestinian Authority Looks to Soft Loans amid Financial Crisis

Palestinian Authority Looks to Soft Loans amid Financial Crisis

Thursday, 25 April, 2019 - 11:30
Palestinian President Mahmoud Abbas. (Reuters)
Ramallah – Asharq Al-Awsat
The United States’ accusation that the Palestinian Authority (PA) was allegedly creating a financial crisis drew fierce backlash from the Fatah movement.

Fatah was very vocal against fiscal measures taken by Tel Aviv and Washington, blaming them for the deteriorating living conditions enduring by Palestinians.

The Trump administration, at a UN Security Council session on the issue at the request of Kuwait and Indonesia, said Palestinians set off a crisis by rejecting the first monthly sums to be taxed from Israel in 2019.

Public sector employees in PA-run territories have not received last month’s paycheck, with no news for a date for when their salaries will be disbursed. More so, the PA is predicted to hold back parts of civil servant salaries several months to come until a new government is formed in Israel after the parliamentary elections earlier this month.

The Palestinian Ministry of Finance has also started implementing a plan based on borrowing from banks, increasing domestic revenues and rationalizing spending.

Suing Israel for “piracy of its fund,” is also on the table for PA officials.

US President Donald Trump's Middle East envoy Jason Greenblatt pinned the blame for unpaid civil servants on the PA.

Israel's security cabinet had withheld tax transfers to the PA over its payments to prisoners jailed for attacks on Israelis.

The Israeli government justified the move by saying it was implementing a law passed last year allowing Israel to withhold funds used to pay stipends to Palestinian attackers and their families from taxes Israel collects on the PA’s behalf.

Greenblatt stressed that the payments encourage violence.

PA officials lamented the decision, saying it will scale up the PA’s general budget deficit from $450 to $600 million dollars.

The Arab League pledged to pay $100 million a month to the PA to plug the gap left when Israel blocked tax transfers,

Seeking a bandage solution for the financial crisis, PA head Mahmoud Abbas met with the President of the Islamic Development Bank in Amman, Jordan. The Palestinian Minister of Finance, in his capacity as supervisor of seven banks operating in the Palestinian territories, also met with Shoukri Bishara, Governor of the Central Bank of Jordan.

Soft loans and grants given to the PA reached $1.3 billion last year.

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