Palestinian Territories to Finance Own Budget by 2013

A view of Hebron, the largest city in West Bank, located in Palestinian Territories. The Palestinian Authority will no longer need budget support by 2013, according to Prime Minister Salam Fayyad. Photo by: Jonas Hansel / CC BY NC-SA Jonas HanselCC BY NC-SA

The Palestinian Authority will no longer need budget support by 2013, its prime minister said.The administration would still need foreign aid for its development projects after 2013 but not budget support, thanks to recently implemented austerity measures and improved tax collection, Prime Minister Salam Fayyad said according to Reuters. Sayyad is a former economist at the World Bank.

“When we reach the year 2013, we will not need foreign aid to support the budget. We will just need development aid,” Fayyad told the news agency.

The Palestinian Authority’s need for foreign budget support is expected to fall from USD1.2 billion in 2010 to USD1 billion in 2011, Reuters notes.

Despite this positive development, Fayyad’s administration is facing a finance gap fueled by a shortfall of aid from Arab states. The austerity measures implemented by the Palestinian Authority recently are designed to prevent a cash crisis that could result from the funding shortfall, the news agency says.Meanwhile, the European Union has made its ninth contribution this year to the payment of pensions and salaries to more than 84,000 civil servants and pensioners in the Gaza Strip and the West Bank. The contribution amounts to 8.93 million euros (USD11.5 million) and was channeled through PEGASE, the EU’s assistance mechanism for the Palestinian territories.

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    Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.