Government Borrows from Banks to Pay 60% of Public Servants’ January Wages

RAMALLAH, January 29, 2015 (WAFA) – The Palestinian government intends to borrow money from local banks to partially pay the public servants’ January wages, stated Foreign Minister Riad al-Malki to  Palestine  Radio Station.

Al-Malki noted that the national consensus government would bear an additional financial burden as a result of its intention to borrow from local banks to pay 60% of the Palestinian Authority’s payroll.

He has not disclosed the amount of the loan the government intends to get in order to address its financial crisis.

The government had borrowed from local banks operating in the Palestinian Territory in early January to pay 60% of the public servants’ December payroll. However, the total amount of the loan has remained undisclosed.

The Palestinian Authority (PA) has approximately 170,000 public servants on its payroll. It has not been able to fully pay their December wages following Israel’s suspension of the transfer of tax revenues to PA as a reprisal for joining the International Criminal Court (ICC).

PA formally presented a request to join ICC on January 2 following the United Nations Security Council’s failure to pass a Palestinian draft resolution setting a deadline for ending the Israeli occupation and establishment of the Palestinian state.

Israel has suspended the transfer of $127 million in average tax revenues usually transferred to the PA as a reprisal for its accession to the ICC.

Under the Protocol on Economic Relations signed in 1994, Israel transfers to the PA $127 each month in customs duties levied on goods destined for Palestinian markets that transit through international borders.

Premier Rami Hamdallah had stated that suspending the tax revenues, the backbone of Palestinian local revenues, incapacitates PA from paying roughly 170,000 employees on its payroll, which costs between $160 and 170 million a month.

According to al-Malki, the PA is examining the efficacy of taking legal proceedings against Israel over the suspension of tax revenues.

Once PA determines such efficacy, it would most likely be embroiled in a legal confrontation with Israel, added al-Malki, who underscored the importance of resorting to the law.

“We are maintaining contacts with all states and international UN institutions to exert more pressures on Israel so that it releases the funds,” added al-Malki.

Aware of Israel’s utter lack of concern for PA’s request, al-Malki affirmed that the PA is looking for alternative options to address its financial crisis, including the activation of the Arab financial safety net.

Arab foreign ministers have promised to provide PA with a monthly safety net of $100 million should Israel withhold the tax revenues, but the commitment has rarely been met.

PA has announced last Tuesday that it intends to reconsider its economic relations with Israel to look into the possible options in dealing with conditions imposed by Israel that were never agreed on by PA.