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OPT: Palestinians feel the pinch as Arab donors stay away

RAMALLAH, 22 August 2011 (IRIN) - Palestinian families in the occupied Palestinian territory (oPt) are facing increasing financial woes this Ramadan, as the Palestinian Authority (PA) juggles with its dwindling budget.

August salary payments for the PA’s estimated 150,000 employees, about half in the West Bank and half in the Gaza Strip, arrived late and it is unclear when September payments will arrive.

“The PA’s financial situation has deteriorated due to shortfalls in donor financing, and revenue collection has been lower than budgeted,” International Monetary Fund (IMF) representative Udo Kock in Jerusalem told IRIN.

Although the reasons for the shortfalls are difficult to gauge, he says. “Mostly Arab donors are not paying,” Ghassan Khatib, spokesperson for Palestinian prime minister Salam Fayyad’s office, told IRIN.

  Foreign donations account for just over a quarter of the total Palestinian budget of US$3.7 billion used to pay salaries and for other government spending. 

The PA budget has been missing about $35 million monthly in donor payments since the start of the year, said Khatib. He estimated the total unpaid amount since January to be about $300 million.

According to the PA finance ministry, between January and July, 33 percent of required external budget support has been disbursed, instead of the 58 percent that should have been disbursed during this period.

Saudi Arabia made a partial payment of $30 million in July. Saudi Arabia and the United Arab Emirates are the largest Arab donors to the PA.

Experts say Arab nations have been focused on other concerns since the January revolution erupted in Egypt, and crises in other parts of the Arab world, like Libya and Syria.

Funds redirected

“Last year my family had two or three types of food on our `iftar’ [daily meal to break the Ramadan fast] table and now we barely have enough,” said Mohammed Musa, 48, a guard at a municipal building in Ramallah and a PA employee.

  His monthly salary of about $460 supports a family of 10 living in Am’ari refugee camp in Ramallah, which has high unemployment and a population of about 10,000.

In response to the crisis, Palestinian president Mahmoud Abbas ordered PA institutions to stop holding official Ramadan `iftar’ dinners and to divert the allocated funds to poor Palestinians.

Several public and private institutions followed suit, like telecommunications company Paltel Group, the largest private sector company in oPt.

Wael Qadan, director of planning with the Palestinian Red Crescent Society (PRCS), said: “In response to Abbas’s request, PRCS cancelled the `iftar’ meal for businesspeople and redirected the funds - about $20,000 - to our emergency budget.” These funds (about $35,000) are used to assist Palestinians with medical care, education fees, and home building, he said.

According to prime minister Fayyad’s office, the PA social affairs ministry has a fund of about $223,000 from the Emirates Red Crescent which is being spent on Ramadan meals for 12,000 people in the West Bank and Gaza, and new clothing for the holiday.


Photo: Erica Silverman/IRIN
A baker in Ramallah preparing ‘katayef,’ a traditional pancake-like Ramadan sweet
Pressure

Palestinian families and businesses say they are feeling the pressure.

“I am selling a quarter of what I sold last Ramadan,” said cafeteria owner Amjad Baker, 28, from Ramallah, as he prepared `katayef’, a traditional pancake-like holiday sweet.

“The economy is down, aid is not coming in, and people do not have money to spend,” said Amjad.

He said new elections should be held, and he hoped for a stronger Fatah candidate.

The PA’s current financial crisis is being exacerbated by uncertainty surrounding the potential Palestinian bid for statehood at the UN in September, and the outcome of reconciliation between Palestinian factions Fatah in the West Bank and Hamas in Gaza.

Gaza government faces crisis

Salaries for the estimated 25,000-30,000 military and civilian employees of the Hamas-led government in Gaza will be paid in full after delays over the past eight months, a Gaza government official who preferred anonymity told IRIN.

“The Gaza government collects $10-12 million in local revenue, and the rest of the government operating budget [estimated at about $30-35 million, according to Hamas officials interviewed by IRIN in 2010] comes from outside sources,” said the official.

There may be additional delays, said the official, mostly related to logistical problems in receiving the funds due to political upheaval in the region.

  Meanwhile, `iftar’ tables in Gaza are often barren, power cuts are frequent, and nearly half the population is food insecure, according to the World Food Programme

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Theme (s): Conflict, Economy, Governance, Health & Nutrition, Human Rights,

[This report does not necessarily reflect the views of the United Nations]

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