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Strapped for cash, PA announces emergency 2015 budget

With Israel withholding taxes, Palestinian treasury slashes operating costs

Lazar Berman is The Times of Israel's diplomatic reporter

PA President Mahmoud Abbas addresses the Palestinian leadership at the opening of a two-day conference in the West Bank city of Ramallah to discuss the future of the Palestinian Authority, on March 4, 2015. (Photo credit: AFP/ABBAS MOMANI)
PA President Mahmoud Abbas addresses the Palestinian leadership at the opening of a two-day conference in the West Bank city of Ramallah to discuss the future of the Palestinian Authority, on March 4, 2015. (Photo credit: AFP/ABBAS MOMANI)

In the throes of deep financial problems, the Palestinian Authority announced Tuesday that it would present an emergency budget for 2015.

“The general budget law for 2015 comes amid complicated and tough conditions, as the treasury is suffering a choking financial crisis,” said a PA cabinet statement, according to Reuters.

The budget, which comes into effect April 1, “rations spending, increases revenues and does not exceed the limit for borrowing from banks,” the statement said.

The PA also said that its employees will continue to receive only partial salaries, and that it had slashed the operating costs of running government offices to only half of the 2014 levels.

The PA spiraled into a financial crisis in late 2014 after funds were withheld by Israel in punishment over the PA’s decision to join the International Criminal Court in The Hague and seek to indict Israel for alleged war crimes.

In a meeting in Cairo last week between US Secretary of State John Kerry and PA President Mahmoud Abbas, Kerry promised that he would press Israel to resume transferring the tax funds, Israel’s Channel 10 news said.

Referring to the breakdown in relations with Israel and the ongoing financial crisis in the PA due to withheld tax funds, Abbas said that “there’s no alternative but to re-evaluate the security and economic relations between the Palestinian Authority and Israel.” Abbas has threatened several times recently to halt security cooperation between his forces and the IDF in the West Bank.

Last month the United States voiced fears that the Palestinian Authority may be teetering on the brink of collapse because of a lack of funding, as Israel withholds taxes and donor aid stalls.

“We continue to be concerned about the PA,” a State Department official told reporters traveling with Kerry on his plane before the leaders met.

“It’s really part of the continuous, ongoing conversation we’re having with the critical stakeholders here,” the official said, asking not to be named.

AP and AFP contributed to this report.

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