The European Union has delayed by ten months this year’s funding to the Palestinian Authority in a move that has deepened the PA’s financial crisis and raised doubts about the payment of August’s civil servant wages.
“The crisis is very serious, and at this stage we don’t know if we will be able to pay this month’s salaries,” a Palestinian official cautiously told The Jerusalem Post.
The European Union has been the largest single donor to the PA, providing 150 million euros for social allowances, including salaries for employees such as teachers and health care workers.
This year, for the first time the EU has not provided its traditional 150 million euros for those salaries in a timely fashion, referencing technical reasons.
The EU might provide funds by October, leaving the PA scraping the barrel in an effort to fund August wages.
The payment of civil servant salaries for June and July were delayed by several days due to the crisis, the official pointed out.
“The banks are saying that they can no longer give us loans because they have reached the maximum of what they are allowed to give,” the official said.
The current crisis is directly linked to the sharp decline in foreign aid, he explained.
An EU spokesperson said that “the payments of social allowances to vulnerable Palestinian families and salaries to civil servants are the responsibility of the Palestinian Authority, not the European Union.”
“The PA has been perfectly aware for months that EU funding in 2021 would be delayed for technical reasons,” the spokesperson said.
“As per our communication with the PA, the delay in our annual support for Palestinians is expected to last until October 2021. The PA – like any responsible public authority – must plan on the basis of the revenue streams to which it has access, including when it knows donor generosity may be delayed,” the spokesperson explained.
The Palestinian official noted that there were other factors at work. There was a significant drop in tax collection, increased debts to the banks and the economic crisis resulting from the spread of COVID-19 and its Delta variant.
The crisis is also caused by Israel’s deduction of hundreds of millions of shekels from the amount paid by the PA to families of terrorists imprisoned or killed by Israel.
Another PA official said that the Ramallah-based government was hoping to receive more than $200 million in foreign aid during the first six months of this year. In reality, however, the PA received less than $35m. during the period, further aggravating the financial crisis.
We have made urgent appeals to the donors to fulfill their obligations towards the Palestinian people,” the official told The Jerusalem Post. “The Arab countries, as you know, have not given us one dollar in the past year. We are now relying on the Americans and Europeans.”