Fayyad backs down from austerity measures amid violent protests
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Fayyad backs down from austerity measures amid violent protests

Palestinian PM will reduce VAT and fuel price hikes; salary cuts for top Fatah officials will help pay for the subsidies

Palestinians chant slogans against Prime Minister Salam Fayyad while protesting the high cost of living in the West Bank city of Hebron,  September 10, 2012.  (photo credit: Nasser Shiyoukhi/AP)
Palestinians chant slogans against Prime Minister Salam Fayyad while protesting the high cost of living in the West Bank city of Hebron, September 10, 2012. (photo credit: Nasser Shiyoukhi/AP)

The Palestinian Authority will decrease fuel prices and cut salaries of top officials, Palestinian Prime Minister Salam Fayyad pledged on Tuesday, after days of protests in the West Bank against the high cost of living.

Fayyad told a news conference that he will cancel a recent price hike for fuel and cooking gas. He will also cut the value-added tax back to 15 percent, the lowest it can go, he said.

In order to finance the subsidy, he will cut from the salaries of government ministers and other top officials. PA ministries will also face budget cuts — except for the Health, Welfare, and Education ministries.

The decision is tinged with politics: The salary cuts will affect top officials in the dominant Fatah Party.

The announcement by Fayyad is part of his efforts to calm the growing unrest in the Palestinian territories. Protesters have focused their anger at Fayyad, saying his policies are responsible for the tough living conditions.

The immediate cause of the protest was anger about rising prices. PA gas prices rose 5% this month, to more than $2 per liter, following similar increases in Israel, which supplies fuel to the territories. The cost of basic food products also increased.

Fatah activists have been leading the protests against Fayyad, a US-educated economist and an independent politician.

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