Ramallah – Together – The Civil Society Team to Support Public Budget Transparency, at the Aman Coalition headquarters in the city of Ramallah, held a discussion session for a research paper on: ‘Areas of reducing spending and increasing revenues to confront the current financial crisis.’ Which aims to come up with recommendations to identify areas and aspects of controlling and reducing public spending, and to investigate opportunities to increase revenues to confront the deficit and the ongoing financial crisis.

The session was opened by the Executive Director of the Aman Coalition, Issam Haj Hussein, stressing that the importance of the research paper and its timing comes in light of the deepening financial crisis in light of the war of extermination being practiced against our people in the Gaza Strip and the attacks of settlers in the West Bank and Jerusalem, stressing that a large part of the financial crisis is caused by occupation piracy. The Israeli government has access to our money and its control
over our resources. This means that part of the crisis is a reflection of political challenges as well. This paper comes as part of the contribution of civil society and the civil society team towards reducing the financial gap, especially in light of a new government that has the desire and will to improve the management of public money. At the same time, Haj Hussein praised the Ministry of Finance’s openness, cooperation, and provision of the information required to prepare the paper.

Features of the financial crisis and its causes:

The author of the paper, the economic expert Dr. Nasr Abdel Karim, reviewed the research paper, explaining the features of the financial crisis and the most important reasons for its deepening, as it exceeded the limits of the financial gap to a scarcity of liquidity, and since last October 7 and the beginning of the war on Gaza it has lost between 40-50% of its incoming cash flows, Without any significant change in spending behavior, which accumulated public debt to reach abo
ut 60% of the gross domestic product, of which 35% is official contractual and the rest is commercial.

What contributed to the continuation and deepening of the financial crisis was the occupation’s restriction of the movement of individuals and trade, the prevention of Palestinian labor inside the occupied territories, the occupation’s piracy of about half of the clearing funds, in addition to the decline in external support to less than 10% from its level ten years ago, and weak governance in managing public financial policy. .

Proposed treatments to reduce spending

The research paper, prepared by Dr. Nasr Abdel Karim, that it dealt with numbers and data; The areas available to reduce spending and increase revenues, indicating at the same time that financial sustainability is difficult to achieve in isolation from stimulating economic growth, and this is dependent on lifting the occupation’s restrictions on Palestinian economic activity.

It is possible to classify expenditures in the general budget into
three categories: First: contractual expenditures that cannot be stopped immediately as a result of their connection to contracts that are illegal to cancel or freeze, and second: expenditures not linked to contracts whose stopping or postponing does not entail legal or administrative obligations. Third: Non-contractual expenses, but morally binding on the authority based on its national and social responsibilities towards groups in need or affected by the occupation.

The research paper presented several proposals to reduce the amount of spending, by approximately 2016 million shekels annually, approximately half of this amount within the reach of the government, through:

Freeze decisions to establish new institutions and initiate the institutional restructuring of power.

Start refining the salary bill and address the phenomenon of ghost employees.

Freezing spending on travel allowances, foreign missions, and capital expenditures such as government vehicles and unnecessary equipment, and freezing some non
-vital development projects.

Immediately activate the tools and procedures for internal and external control over the performance of the competent departments in the medical referral file and stop exceptional, unjustified and not health-related referrals.

Addressing net lending through good planning, coordination between stakeholders, and seriousness in application, by activating the committee responsible for the file, taking into account the economic and social conditions of our people in the camps.

The need for the Palestinian National Authority to distance itself, as much as possible, from social services from any financing risks. Given the importance of these services, and their significant impact on poor and marginalized groups.

Proposed solutions to increase revenues

The research paper also presented treatments to increase the authority’s revenues by about 1,355 million shekels annually, of which about 200 million shekels can be increased without obstacles, through:

Postponing the benefits (tax an
d customs exemptions and exceptions) enjoyed by investment projects for the year 2024, by either stopping their work permanently, or tightening the criteria and conditions for granting them and following up on the evaluation of their returns.

Intensifying coordination between the Ministries of Finance and National Economy regarding basic commodities (food), subject to the ‘commodity quota’ system, and working to institutionalize and improve its management to serve the interest of the citizen.

Obliging large taxpayers to pay early (immediate) tax on their expected profits for the current year, which provides immediate liquidity.

Establish a voluntary fund to finance a coherent ‘recovery’ programme.

Urging companies to intensify and improve the management of their social responsibility file and direct them to relief and health efforts.

Ministry of Finance: A large part of the reforms approved by the government have been achieved

During his intervention, A. confirmed: Tariq Mustafa, Director General of the
General Budget at the Ministry of Finance, on the recent decisions of the Council of Ministers to form reform committees, study spending axes in ministries and government institutions, and present proposals related to reducing and rationalizing expenditures. Pointing out that these decisions entered into force urgently, such as the issue of government vehicles, travel supplies, and rented government buildings. Mustafa confirmed that the numbers contained in the research paper are realistic. Emphasizing the seriousness of the Council of Ministers’ decision to open up and cooperate with civil society and its recommendations.

A. touched on Mustafa pointed out the points mentioned in the research paper to reform the revenue aspect, and said that a large part of it has been achieved, and that it has grown during the last ten years, until before the last war on our people in the Gaza Strip, by more than 110%.

A said. Mustafa said that the Ministry of Finance presented to the Reform Committee proposals to address
net lending and the health system in general, including health insurance and medical transfers, and invest in radical reform of the health system and reduce dependence on transfers to the private sector.

As for the salary bill, A. pointed out: Mustafa pointed out the difficulty of this issue, attributing part of the problem to the agreements concluded by previous governments with some unions, which also led to a gap in salaries between employees of one ministry/institution and another. He said that the Ministry of Finance is currently reviewing the Civil Service Law, to unify the salary scale between ministries. Stressing that institutions need to be restructured, by identifying the surplus and the need of each institution for employees, and this takes time to achieve.

Financial and Administrative Control Bureau: We are ready to monitor the implementation of the reform decisions of the Council of Ministers

For his part, the Director General of the General Administration for Economic Control from the Financ
ial and Administrative Control Bureau, Muawiya Asaad, confirmed that the Bureau is ready to monitor the implementation of the decisions of the Council of Ministers and prepare reports in this regard.

Asaad indicated that the Bureau is currently working on preparing a report on health insurance, which will be issued soon to the relevant authorities, and the report will be published on the website.

Emphasizing at the same time the importance of the previous government’s decision to prepare final accounts for all centers of responsibility, to enhance accountability and transparency. Work is underway to prepare seven final accounts for the most important ministries.

The attendees unanimously agreed on the necessity of carrying out urgent reform processes and implementing the decisions issued by the government transparently, to increase revenues and rationalize expenditures in order to overcome the financial crisis that is deepening day by day.

Source: Maan News Agency