Palestinians demand salaries as sanctions and cash crisis bite.

Palestinians demand salaries as sanctions and cash crisis bite.(AA).Hundreds of Palestinian government workers protested outside their prime minister's office on Tuesday (January 15) saying they had not received a full salary in almost three months amid a deepening financial crisis.
A cash shortfall in the Palestinian Authority worsened after Israel imposed sanctions following the West Bank government's successful bid to gain de-facto recognition of Palestine as a state at the U.N. General Assembly in November.
The demonstration in downtown Ramallah was the latest in a series of sporadically violent protests over cuts and tough austerity measures in the Israel-occupied West Bank.
Protesting alongside the government workers were farmers who had not received their subsidies since the government began searching for ways to plug a hole in its finances.
“We want support for the grazing animals, the agriculture and the farmers, and to lower the prices of seeds for us,” said a farmer from Bani Naeem.
Deprived of potentially lucrative land and infrastructure by Israeli restrictions and Jewish settlements, the West Bank's economy depends on foreign aid.
'A government can liberate a worker, it cannot liberate a settlement' read a banner raised by two elderly men at the protest.
From a high of $1.8 billion U.S din 2008, foreign aid plummeted to around 600 million last year, according to the Palestinian Monetary Authority.
Despite the shortfalls, hiring has continued to rise in the Palestinian Authority's swollen public sector, and efforts to improve tax and utility bill collections have only increased the public anger.
“The salary is based on the steadfastness of this sector of the Palestinian people. Giving salaries means supporting these people, the merchants, the manufacturers and the private sector. When you insert $120 million U.S. into the country, it means you will make this country work. The salary of a government worker will make the country work,” said Ministry of Economy employee Reem Najjar.
The day after the protest, market vendors in central Ramallah complained about plummeting sales as a result of the unpaid government salaries.
Frustrated Palestinian officials said Arab countries had failed to deliver a $100 million monthly safety; promised before the U.N. statehood move and accused Washington of pressing its Gulf allies not to pay.
Around $200 million in U.S. budget assistance pledged by Washington in 2012 has been held up by Congress which is opposed to Palestinian moves that it says undermines Israel's security.
Israel controls entry and exit points in the occupied West Bank and has repeatedly withheld customs duties it collects on the Palestinians' behalf, a main source of government revenue, in response to Palestinian political moves it opposes.
Israel said in December it was retaining the dues to cover millions of dollars of unpaid bills with local utility firms. Hmmmm.......The more financial aid they receive the lower their GDP.Read the full story here.

Related:  "Understanding Palestinian Poverty" - Former PA Interior Minister, all the funds donated to the PA ‘have gone down the drain, and we don’t know to where.’

IMF warns Palestinians may face cuts without more aid........on the other hand their GDP might rise?

Note in this overview of donated US Aid to Palestine that the more money they recieve the lower their GDP becomes!

 

IMF warns Palestinians may face cuts without more aid........on the other hand their GDP might rise? (AlArabiya).The International Monetary Fund on Saturday urged donors to meet their aid pledges to the Palestinian Authority, warning that unless funding was forthcoming it would be forced to cut public wages and social benefits to address a deepening fiscal crisis.
The IMF said the aid-dependent Palestinian economy had entered a “difficult phase” with a severe liquidity crunch worsening since last year due to a drop in aid from Western backers and wealthy Gulf States and Israeli restrictions on trade.
An IMF report released on Saturday, prepared for a donor meeting on Palestinian aid in Brussels next week, estimated a financing gap of about $500 million. The Palestinian authority is relying on donor aid to cover its 2012 budget deficit projected to reach $1.1 billion.
Most Palestinian aid comes from the United States, the European Union and Arab nations, allowing the Palestinian Authority to pay the salaries of public workers and benefits.
But the United States, which is trying to restart Israeli-Palestinian peace talks, cut off funding last year when Palestinian President Mahmoud Abbas defied calls from Washington and made a unilateral bid for statehood recognition at the United Nations.Palestinian officials say more than $150 million of U.S. aid is frozen.The IMF said just $800 million of $1 billion in promised budget support was disbursed in 2011. In addition, development aid was only $169 million compared with $370 million committed by donors.IMF mission chief to the West Bank and Gaza, Oussama Kanaan, said it would be very difficult for the Palestinian Authority to cover the 2012 financing gap without donors making good on existing pledges and providing additional aid.
He said steady declines in foreign assistance had led to a large increase in domestic payment arrears of about $500 million to private businesses, and increased government debt to commercial banks to around $1.1 billion.“The stock of indebtedness has increased to such an extent that the PA is no longer able to postpone payments to the private sector and to banks,” Kanaan said. “If money from the donors isn’t forthcoming ... the only way it can cut expenditures is to cut wages or social benefits.”
“The deficit is very large and it cannot compensate anymore for the shortfall by accumulating debt because the private sector will not allow them and banks will not lend them much more,” he added.
The IMF said the Palestinian Authority should immediately prepare a contingency plan to cover the financing gap given the uncertainty of international aid flows. It should start cutting expenditures, increasing tax revenue and ensuring that the wage bill, which represents more than half of total expenditures, is contained.
“This will prevent a situation where the PA is forced by continued aid shortfalls to take drastic measures at short notice, such as a sudden curtailment of social transfers or payment of only a portion of the wage bill,” the report said.
The IMF said while the size of the wage bill had declined in recent years, at about 18 percent it was still significantly higher than the 10-15 percent typically found in countries of similar stature.Read the full story here.