Finance minister says an emergency budget is now in effect

RAMALLAH, Finance Minister Shukri Bishara said today that an emergency budget based on rationing will be put into effect until the end of the clearance money crisis with Israel.

He said during a press conference in Ramallah that President Mahmoud Abbas and the Palestinian leadership have agreed yesterday to his call for an emergency budget.

“This means disbursing the cash we have and working to secure the delayed commitments. We will pay what is available in accordance with a fair and equitable plan, including the adoption of the best way of disbursing operating expenses without affecting the basic services provided to citizens,” he said.

Bishara explained that the national team for the crisis management that includes a number of cabinet ministers, members of Fatah Central Committee and the head of intelligence Majed Faraj will make its decisions every month based on developments in the crisis.

He said that while salaries will be paid at only 50% of their value as of this month, this will increase to 60% and may be 70% during Ramadan, which starts early May as the leadership expects the financial crisis to last for at least five months.

“This time it is different from previous times when they (Israel) used to send us the clearance bill and at the bottom there is a single line that talks about cuts for electricity, health and water. We used to sign it under pressure of rushing it. The total amount of the cuts reached 20.3 billion Israeli shekels ($5.6 billion) over the past 10 years. But this time we refused to accept it,” he said.

“We told the Israeli side in an official letter that we will no longer accept any deductions from the clearing revenues that we do not agree on in advance. This is the first step in a legal and administrative battle. The next phase is difficult and we need to be act calmly and as one, “he added.

The rate of clearance revenues ranges between 650 and 750 million shekels ($180 -$206 million) every month, which accounts for more than 50% of the total Palestinian revenues.

Bishara said that the national team has taken a number of decisions to ration expenditure, including the suspension of employments and promotions in the public service, maintaining the minimum in operating expenses, including stopping replacement of government cars and reducing fuel allocations, and stopping the acquisition of buildings.

He explained that the Palestinian leadership is in contact with the Arab League, the Islamic Development Bank and some international parties to activate the safety net for the Palestinian treasury in light of the crisis.

With regard to borrowing from banks, Bishara stressed that the government did not borrow any money to cover the salaries it paid this month and was able to pay salaries from what it had without having to borrow anything. “We will leave this option for the coming months,” he said.

“Over the past years, we were committed not to borrow for consumption. We have kept our debt to banks at $1.3 billion, which is just 11% of GDP and less than 15% of total bank deposits. Our goal was to maintain a space for emergency borrowing, like the one we are currently experiencing,” explained the finance minister.

“We need to borrow periodically $50 to $60 million per month over the coming months,” he said. “This keeps us within reasonable borrowing s.”

As for the general budget for 2019, which is only 20 days away from the end of the legal period for its approval, Bishara said that the Ministry of Finance has prepared the preliminary budget as usual according to 2018 data. “We were on the right track, but we had to put a period and stop. We entered a new stage in which we will work based on an emergency budget.”

Source: Palestinian News & Info Agency