News Analysis: Financial crisis in Palestine may worsen amid COVID-19 outbreak: experts

Source: Xinhua| 2020-04-07 01:44:48|Editor: huaxia

by Saud Abu Ramadan

RAMALLAH, April 6 (Xinhua) -- Some experts worry that the economic situation of Palestine will worsen under the precautionary measures against COVID-19 and the status of emergency on the Palestinian territories.

A few days ago, Palestinian President Mahmoud Abbas announced to extend the status of emergency in Palestine for an extra 30 days, and called for tightening the precautionary measures to combat the coronavirus.

Local analysts and economic experts agreed that the current situation may soon spark a severe financial crisis in Palestinian that may disable the Palestinian Authority (PA) to fulfill its commitments towards the population.

Although the PA had cashed a full salary of March to all its employees in the West Bank and the Gaza Strip. Analysts believe that the PA may not be able to fulfill its financial commitments including paying salaries to its workers because of a lack of enough financial liquidity.

They told Xinhua in separate remarks that "it is so important that the PA ensures enough financial liquidity for the government and for the companies."

However, the major sources for ensuring enough financial liquidity in the Palestinian territories are limited, they warned.

"The Palestinian economy is facing a dilemma of the priority to ensure the financial liquidity that is needed for keeping financial stability and economic growth," said Mohammad Mustafa, chairman of Palestine Investment Fund.

"Ensuring enough cash needed for the government and the companies to enable them to carry on with their missions is the main upcoming challenge for the Palestinian Authority," Mustafa said in a press statement.

He announced that Palestine Investment Fund has recently transferred a large part of its 2019 profits to the PA treasury without specifying the amount of the money.

Palestinian Prime Minister Mohammed Ishtaye said a week ago that his government will perform under an emergency budget amid the crisis of coronavirus.

He told a news briefing last week that the PA's local tax revenues will drop to more than 50 percent while international donations have declined as well.

"Therefore, we will act in an ascetic emergency budget and reduce our running costs as much as we can," Ishtaye said.

Ishtaye noted that the financial needs for Palestine to fight the virus were estimated at 120 million U.S. dollars, adding that "the treasury deficiency will get doubled and the national economic losses will be huge."

The bill of public servants' monthly salaries that the PA pays is 166 million U.S. dollars and 70 percent of it is covered from the local tax revenues and the tax revenue dues that Israel collects on its behalf every month.

Jafar Sadaqqa, a Ramallah-based economist, said that the PA may face a 70-percent decline of its local revenues amid a halt of businesses and a retreat of import and consumption.

One of the choices that the Palestinian government may have is to request an urgent transfer of its remaining tax revenue dues held by Israel for months, Sadaqqa added.

The Palestinian government on March announced that Israel had transferred 25 million U.S. dollars to its treasury. Ibrahim Melhem, spokesman of the Palestinian government, said the money is part of the tax revenue dues.