“Donor support, including direct budget support, continues its multi-year decline,” Wennesland told the 15-member body at its monthly meeting on the Israeli-Palestinian conflict.
“Estimates suggest that the PA will have a 2021 budget deficit of around $800 million. This would nearly double the 2020 gap,” Wennesland said, adding that the “borrowing capacity of the PA with the banks has been exhausted.”
“Along with other longstanding fiscal leakages that are contributing to the financial crisis, Israel continues to deduct millions of US dollars per month from clearance revenue transfers, in response to Palestinian payments to security prisoners, their families and the families of those killed in the context of attacks,” Wennesland said.
He acknowledged since coming into office May, Prime Minister Naftali Bennett had skirted Israel’s deduction policy by approving a NIS 500 million loan against future tax fee payments Israeli would collect.
That loan was “critical,” Wennesland told the UNSC, “but only delays temporarily the looming crisis and does not address the structural impediments imposed on the Palestinian economy.”
Wennesland called on both Israelis and Palestinians to implement policy reforms that would improve the PA’s financial situation. He also called on the 15-member Ad Hoc Liaison Committee which oversees donor funding to the PA to address the issue when it meets in Norway in November.
He did not mention the impact to the PA of the technical delay in annual European Union funding of some 140 million euros. Budget delays in Brussels has meant that the PA has yet to receive any direct EU funds and may not see that annual sum until next year.
British Ambassador to the UN in New York Barbara Woodward said she was concerned that the PA would not be able to pay its salaries in November.