Expert says PNA to go through hard fiscal situation

by Saud Abu Ramadan

RAMALLAH, July 23 (Xinhua) -- A Palestinian financial expert and former minister of planning ruled out Thursday that the Palestinian National Authority (PNA) would face an imminent fiscal collapse and a real bankruptcy.

Samir Abdallah told Xinhua on telephone from Ramallah that "this matter (PNA's financial collapse) will never happen."

He revealed that the PNA depends on its own financial resources "that cover 50 percent of its financial needs." He added that there are pledges of so many donors to develop and improve the PNA budget.

However, he admitted that "This doesn't mean the fiscal situation of the PNA is good, but it is difficult."

The PNA, which has been passing through a real financial crisisover the past few months, denied on Thursday earlier Israeli reports saying that the PNA is facing a serious fiscal collapse and a real bankruptcy.

A senior Palestinian official, who spoke on condition of anonymity, told Xinhua that "it is true that the PNA's fiscal situation is difficult, but this doesn't mean that it will collapse."

A donors' conference, held in the Sinai resort of Sharm el-Sheikh in Egypt in March, had garnered the PNA over 4 billion U.S. dollars, but the PNA complained that most of the donors haven't yet fulfilled their financial pledges.

"The donations which the PNA receives from the donor countries have been minimized to a great extent due to the disability of those countries to fulfill their commitments, and due to the world's economic crisis," said the PNA official.

Since established in Gaza and the West Bank in 1994, the PNA depends mainly on international donations to pay salaries to more than 120,000 security and civil servants and cover its running costs. The PNA doesn't have any other natural resources of income.

"Unfortunately, many Arab and foreign donors didn't fulfill their commitments to offer the needed financial support to the PNA," said the official.

However, he added that "the PNA has the ability to keep holding up after some of the donations were received from some countries and the World Bank."

Earlier on Thursday, Israeli media quoted Benhas Anbari, an Israeli expert in the Israeli-Jerusalem Center (IJC), as saying that the PNA is going through a critical fiscal crisis that would lead to a collapse.

"The media focus on the Palestinian reconciliation between rival Fatah and Hamas groups has covered the severe fiscal crisis which the PNA suffers from," said Anbari in his evaluation.

He revealed that the last visit of Prime Minister Salam Fayyad to the United States aimed in a first respect to save the PNA from its severe fiscal crisis, adding that Fayyad held talks in Washington with the head of World Bank and other officials and asked their immediate help to save the PNA.

Earlier this month, the World Bank decided to funnel 40 million U.S. dollars into the PNA to aid the payment for its employees.

According to a special fiscal report, the PNA has received 328 million dollars as a total foreign finance during the first five months of 2009, which is less than the 600 million dollars it needed during the same period of time. In order to cover its deficit, the PNA borrowed money from local Palestinian banks.