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Palestinian finance minister: statehood long overdue

Sept. 20, 2016 7:43 P.M. (Updated: Sept. 21, 2016 3:36 P.M.)
BETHLEHEM (Ma'an) -- In an address to members of the Ad Hoc Liaison Committee in New York on Monday, Palestinian Minister of Finance Shukri Bishara said that five years after the World Bank and the IMF said the Palestinian Authority (PA) was fully ready for statehood, Palestinians were “still waiting.”

“Today, five years later, we Palestinians are waiting -- and still waiting for that illusive statehood,” he said to the committee, which was established in 1993 as the principal mechanism for international aid to the PA.

“What more would it take for those countries that have not yet officially recognized us to come to terms with the self evident truth that Palestinian statehood has become long overdue?” he asked, after listing a number of economic success stories by the PA over the years, despite enduring the financial challenges of Israel’s occupation of the Palestinian territory and “two horrible wars on Gaza during the last five years.”

According to Bishara, the PA has increased revenues at an aggregate of more than 70 percent over the last three years, noting that this came in spite of Israel’s control of some 60 percent of the occupied West Bank.

The PA has also decreased the ratio of budget deficit to the GDP from approximately 16 percent to 8 percent over the same period, and also expanded the registered taxpayers base by over 25 percent since 2014, which he said was “still work in progress.”

Bishara also noted that several initiatives have been made to boost the Palestinian private sector and that “despite the dramatic decline in donor aid,” the PA has maintained social and poverty alleviation programs.

He highlighted that the PA also continued to devote 40 percent of its “meager” resources for the benefit of the beleaguered Gaza Strip’s nearly 2 million inhabitants.

“We cover the cost of everything -- from health, education, electricity, water, social and disability benefits, as well as wages in an aggregate amount of $1.4 billion annually -- against little fiscal or cost recovery. This amount is almost three times the level of aid we are currently receiving.”

Bishara warned that if aid levels remained as they currently are, at roughly $400 million dollars, “then unfortunately, our deficits will become more entrenched and even more intractable.”

“Of course, if the international community helps in releasing us from the yolk of occupation, and are given the chance to freely manage our lives and enjoy our national endowments, resources and territorial rights, then there would no longer be any need for aid.”

Bishara also noted the “stifling” effect of the Israeli occupation and the Paris Protocol on the Palestinian economy -- through which Israel collects VAT, import taxes, and other revenues on behalf of the PA.

“For instance, we have little choice but to import on a net basis from the Israeli market most of our requirements in terms of goods and services to the tune of $5 billion annually -- that is to say almost 50 percent of our GDP."

A report released in April by the World Bank found that the Palestinian Authority was losing up to $285 million a year under its current economic arrangements with Israel.

The current revenue sharing arrangements as outlined by the Paris Protocol "have not been systematically implemented," the World Bank said.

Tax leakages on bilateral trade with Israel and undervaluation of Palestinian imports from third countries accounted for the multi-million dollar losses in revenue, according to the report. 

“The tax refunds originating from these imports that Israel is required to transfer back to us, constitute approximately 70 percent of our governmental cash flows,” Bishara said.

“This occupation has been among the longest in modern history,” he said concluding his address. “The time has come for it to end. It simply must end.”

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