Faced with a worsening financial crisis, the Palestinian Authority has slashed the salaries of its public sector employees.
The Palestinian Authority told public sector employees today that it would pay them just half of their May salaries as the embattled government attempts to patch up its deepening revenue crisis.
At a press conference in Ramallah today, Palestinian Finance Minister Shukri Bishara said the Palestinian Authority’s domestic revenues had dropped by 80% in the last four months. He added that public salaries would be paid out at 50% through the end of the year, unless the government is able to secure emergency funds.
The Palestinian Authority, which exercises limited self-rule over the impoverished territory, announced June 4 that it would stop accepting tax revenues from Israel. The refusal was seen as a protest over Prime Minister Benjamin Netanyahu’s plan to annex parts of the West Bank, land the Palestinians want for a future state.
The tax revenue, which Israel collected on the authority’s behalf on goods that arrived at Israeli ports, was estimated at $190 million per month. The transfers accounted for roughly 60% of the Palestinian budget in 2019 and were expected to make up an even greater share this year as a result of the coronavirus.
The World Bank projects the Palestinian economy could shrink up by to 11% in 2020. The cash-strapped Palestinian government also said last month that it would cut $105 million it sends each month to the Hamas-ruled Gaza Strip, where the Palestinian Authority handles the wages for civil servants.
In May, Israel announced it would loan the Palestinian Authority as much as $228 million over a four-month period to offset coronavirus-related losses to the economy.