Netanyahu orders transfer of $60 million to PA to help with fiscal crisis

Earlier in the day, Fayyad had backed down from austerity measures amid violent protests in the West Bank

Palestinians demonstrate against the government in Ramallah, September 9 (photo credit: Issam Rimawi/ Flash90)
Palestinians demonstrate against the government in Ramallah, September 9 (photo credit: Issam Rimawi/ Flash90)

Prime Minister Benjamin Netanyahu ordered on Tuesday the transfer of a $60 million (NIS 250 million) advance to the Palestinian Authority from tax revenues collected on its behalf by Israel.

The decision was made due to the PA’s recent fiscal turmoil and violence that erupted as a result of cost-of-living hikes in the West Bank.

Netanyahu consulted with Finance Minister Yuval Steinitz on the issue and communicated the directive through Isaac Molho, Israel’s special envoy to the Palestinian leadership.

During his meeting with Bulgarian Prime Minister Boyko Borissov on Tuesday afternoon, Netanyahu claimed Israel was working on “several fronts” to help the PA cope with its economic difficulties.

“We have made several changes in the taxation agreements,” he said, “and we are advancing transfers.”

Israel also helped Palestinian workers by “making a few steps easier for them,” a media statement issued by the prime minister’s office stated.

“For our part, we are making efforts to help the PA survive this crisis. I hope that they will succeed in doing so; this is our in our common interest,” the statement continued.

The PA announced earlier on Tuesday that Palestinian Prime Minister Salam Fayyad pledged to lower fuel prices and cut salaries of top officials, after days of protests in the West Bank against the high cost of living.

Fayyad said in a news conference that he would 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, Fayyad 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.

The Associated Press Contributed to this report.

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