Can Palestinian Authority cope with decline of international aid?
International aid to the Palestinian Authority fell by 70% over the last four years, significantly affecting the Palestinian government's budget, and consequently, the economy.
RAMALLAH, West Bank — By the end of August, international financial aid to the Palestinian government registered an unprecedented decline, Palestinian Prime Minister Rami Hamdallah said during an interview Aug. 27 on Maan TV. He said financial aid dropped by 70% over the last four years, and had fallen to $350 million between January and August of this year. On Sept. 7, Palestinian Finance Minister Shukri Bishara said that the overall foreign financial aid this year had risen to $400 million.
After the Palestinian Authority (PA) was established in 1994 following the 1993 Oslo Accord, the international community pledged to provide financial support worth $1.2 billion to $1.5 billion a year. Hamdallah said the donor countries generally met their pledges until 2012, after which the budget support started declining until it fell to $750 million in 2015, according to Palestinian Ministry of Finance figures.
The Palestinian general and development budget for 2016 amounted to $4.251 billion, of which $750 million was to be received through foreign financial assistance and dedicated to the operating budget and $245 million for the development budget, which mainly focuses on the development of centers for education, health and social affairs. The budget expenses are stated in the General Budget Control and Financial Affairs Law No. 7 of 1998. However, only $400 million was received as part of the 2016 budget.
The financing gap — expenses without financial cover — in the budget, which was approved by President Mahmoud Abbas on Jan. 9, has reached $387 million, but it is expected to widen should foreign aid remain lower than in the budget.
