West Bank and Gaza

Recent Fiscal and Financial Developments

October 2006

The Palestinian government has been facing a very difficult fiscal situation since end-March 2006. During April–September, resources available to fund the government’s recurrent expenditures fell sharply, as an unprecedented drop in tax revenues—largely because Israel stopped transferring indirect taxes it collects on the Palestinian Authority’s behalf—was only partially offset by an increase in external support. The scarce resources that were available were used mainly for payments to government employees and to finance fuel imports. Government workers on average received payments equivalent to only about 40 percent of their normal incomes. As a result, little was left for ministries’ running costs and social transfers.

Document symbol: IMFfis1006
Document Type: Report
Document Sources: International Monetary Fund (IMF)
Subject: Economic issues, Situation in the OPT including Jerusalem
Publication Date: 31/10/2006