Effects of the Coronavirus Pandemic on the Palestinian Economy: Relevant Statistics

(It has) become clear, and in order to show the impact of the Corona pandemic on the Palestinian economy, that we must examine the data of net total revenues for the period 1-1-2020 until 31-7-2020, and compare them with the corresponding period of 2019 (from 1-1-2019 until 31-7-2019), which were reported in the statements and statistics of the Ministry of Finance and Planning in Ramallah; it appears that total local revenues in Palestine, which we will discuss only, usually constitute 39% of net total revenues, and local revenues generally consist of local tax revenues and non-tax revenues, which decreased in value for the period from 1-1-2020 until 31-7-2020 by an amount of 366 million shekels compared to the same period of 2019, as explained below:

(Have) local tax revenues up to 31-7-2020, which usually constitute an annual rate averaging 62% of total local revenues, were on the decline, as they decreased by an amount of 93 million shekels; income tax fell during the first seven months of 2020 by an amount of 63 million shekels, value-added tax revenues also decreased by an amount of 53 million shekels, and customs revenues decreased by an amount of 48 million shekels. However, cigarette excise duties increased by an amount of 71 million shekels...!!, and property tax was affected in the comparison periods only by a decrease of 1 million shekel.

As for non-tax revenues up to 31-7-2020, which usually constitute an annual rate averaging 32% of total local revenues, they (became) lower, as they decreased by an amount of 271 million shekels as of 31-7-2020 (the first seven months of 2020), compared to the same period of 2019...; designated collections also decreased by about 2 million shekels... noting that local non-tax revenues are fees and fines, licenses, etc., while the term "designated collections" refers to taxes and revenues allocated to local government bodies, 90% of property tax, and 50% of transport and communications taxes..

(Was) ...the total of total local revenues for the first seven months of 2019 (from the period 1/1/2019 until 31/7/2019) amounted to 2,621 million shekels, of which:

Tax revenues: in the amount of 1,618 million shekels, coming from the following: income tax amounting to 500 million shekels, value-added tax amounting to 647 million shekels, customs amounting to 351 million shekels, cigarette excise duties amounting to 104 million shekels, and property tax amounting to 12 million shekels...

Non-tax revenues: in the amount of 796 million shekels, and designated collections in the amount of 206 million shekels

Clearance revenues, which usually constitute an annual rate ranging between 60-65% of total public revenues in Palestine, amounted, on a cash basis, to 1,300 million shekels as of 31-7-2019, noting that no clearance revenues were reported for the months of March, April, May, June, July of 2019.....to the treasury of the Palestinian National Authority.

(Became) ...the total of total local revenues for the first seven months of 2020 (from the period 1/1/2020 until 31/7/2020) amounted to 2,255 million shekels, of which:

Tax revenues: in the amount of 1,525 million shekels coming from the following: income tax amounting to 437 million shekels, value-added tax amounting to 594 million shekels, customs amounting to 303 million shekels, cigarette excise duties amounting to 175 million shekels.

Non-tax revenues = in the amount of 525 million shekels, and designated collections in the amount of 205 million shekels

(Have become) clearance revenues on 31-7-2020 (for the period from 1-1-2020 until 31-7-2020) not comparable to their counterparts on 31-7-2019 (for the period from 1-1-2019 until 31-7-2019), due to the Palestinian National Authority's refusal to accept them from the Israeli occupation authorities, because of the latter's insistence on deducting the amounts allocated to the families of prisoners, martyrs and wounded Palestinians from the Palestinian clearance revenues.

(Remained) clearance revenues for the period from 1-1-2020 until 31-7-2020 also in the same circumstances, as the Palestinian National Authority (still) refuses to receive clearance revenues from the Israeli occupation authorities for the same reason mentioned for the 2019 period; clearance revenues received for the aforementioned period up to 31-7-2020 amounted to 3,307 million shekels... noting that there are also several months in this period that were not received by the Palestinian National Authority after security coordination and communications with the Israeli occupation authorities were stopped in this year 2020.

It (has) become known that clearance revenues essentially belong to Palestinians and clearance revenues consist of several types of taxes: customs taxes constitute the highest proportion of these revenues at about 42%-45% as an annual general average; fuel tax, known as the "blue tax", comes second, estimated at approximately 30-35% of total clearance revenues annually; then comes value-added tax, estimated at about 20%-23% on an annual average; then income tax at about 1-2%...approximately, and others... The monthly average of clearance revenues that Palestinians used to receive in normal circumstances was about 750 million shekels per month.

- In this regard, the Palestinian Authority received an amount of approximately 2 billion shekels to 2.4 billion shekels, the value of the blue tax – fuel, in October 2019, and the amount received represents sums accumulated over several months retroactively, held by the Israelis. It was said at the time that the two sides agreed that the Palestinian Authority would collect the fuel tax itself instead of Israel, a step which Palestinians have continuously demanded, and therefore it was understood in that period, if these statements were correct, that the Palestinian General Petroleum Authority, which supervises all fuels in Palestine, would pay the costs of its monthly fuel purchases invoices without paying the tax on those invoices, which this tax (fuel tax) usually amounts to at a rate of 219 million shekels per month. The Ministry of Finance’s statistics expected that the amount of the fuel tax estimated for 2019 would be 2,628 million shekels (as of 31-12-2019), from clearance revenues also expected to amount, as of 31-12-2019, to 8,671 million shekels for a full year on an accrual basis, while an amount of 7,868 million shekels was received as clearance revenues for 2019 on a cash basis — that is, it was actually received. However, the blue tax, according to our examination of the statistics issued by the Ministry of Finance, still shows its figures within the clearance revenues that are received from Israel, as shown in the fourth-quarter 2019 statistics and the first seven months of 2020. The volume of fuel purchases that the Palestinian General Petroleum Authority buys monthly is estimated at about 80 million liters of fuel, of which 25 million liters are gasoline per month, and 55 million million liters are diesel per month, and 14,000 tons of cooking gas, and other derivatives. In this regard, some studies indicate the existence of fuel smuggling from Israel to the Palestinian areas at a rate of 20%, where estimates from some sources place the value of the tax on these smuggled (illegal) fuels at about 750 million shekels annually, which goes outside the Palestinian Authority’s public treasury, while the value of the legally taxed annual fuel tax is about 3 billion shekels. It had been estimated that the fuel tax from 1/2019 until July-7/2019 would amount to 1,467 million shekels, while it had been estimated that the fuel tax from 1-2020 until 31-7-2020 would amount to 1,022 million shekels (according to Table No. 4 of the Ministry of Finance and Planning statistics) — on an accrual basis.

- It has become necessary to clarify our view in analyzing and interpreting the indicators of these data: the impact of the Corona pandemic on domestic revenues as of 31-7-2020 compared to 31-7-2019 (the first seven months of each year...) was clear. Domestic revenues stemming from local taxes fell by an amount of 93 million shekels; local income tax fell by 63 million shekels; locally collected value-added tax fell by 53 million shekels; customs duties collected locally also fell by 48 million shekels. This decline in local tax revenues in the period from 1-1-2020 to 31-7-2020, compared with the same period in 2019 (1-1-2019 to 31-7-2019), appears plausible in light of the measures taken and the state of emergency and lockdown; consequently there was no regular selling and buying activity nor normal work by the public sector institutions and agencies. Most facilities and sectors were shut down. However, cigarette excise duties, as we noted, increased by 71 million shekels on 31-7-2020 compared with the same period in 2019, which appeared contrary to expectations across most sectors, and, as we mentioned earlier, increased the excise yield on cigarettes. Despite the state of emergency, the lockdown and the restrictions on movement that were imposed for five months from 3-2020 due to the Corona pandemic, excise duties would normally have declined. Some sources estimate that this increase represents the value of taxes and excises that used to go outside the legal channel away from the state treasury, because—according to some sources—some quantities of cigarettes and maassel were smuggled through the crossings with Jordan, thus avoiding payment of the legally required duties and excises. And because movement was constrained due to the Corona pandemic, cigarette and tobacco consumers bought from the local market, which resulted in achieving excise revenues on cigarettes in accordance with the law..!!

- As for the second category of domestic revenues, it is the non-tax revenues, which the statistics show declined clearly by an amount of 271 million shekels compared with the periods noted above. It is logical that these local non-tax revenues would fall due to the closure and lockdown imposed under the state of emergency instructions because of the Corona pandemic. In reality, local non-tax revenues represent the value of locally collected fees, fines and licenses that are imposed on individuals and other sectors of the economy when there is activity; and because of the curfew, lockdown and restrictions on movement, a deep decline in these local revenues was logical compared with 2019 in the period mentioned above.

- As for receipts from clearance revenues of all kinds, which are normally received monthly from the Israelis in ordinary days, however as a result of the suspension of security coordination and communications with the Israeli side as we noted above, and the imposition of movement restrictions in most areas, it followed that receipts from clearance revenues declined because imports and domestic and foreign trade, and their banking facilities, also decreased significantly as shown by bank statistics. Consequently, the clearance revenues components—mainly customs duties and fuel tax—would decline, among others. Therefore, in light of the irregularity and incompleteness of the data regarding clearance revenues, we cannot analyze them and present definite results, since these do not reflect reality amid the crisis regarding these revenues. Nevertheless, it is certain that a real decline occurred in clearance revenues amid the Corona crisis, and as bank statistics show a reduction in banking facilities directed to domestic and foreign trade by an amount of $222 million (about 777 million shekels); these statistics are dated 30-6-2020 compared with the facilities granted as of 30-6-2019, and this reflected on the Palestinian economy. In addition, banking facilities to the tourism sector declined, despite an increase in banking facilities for banks in the West Bank in the second quarter of 2020 (30-6-2020) by $714 million compared with the second quarter of 2019. The increases appeared in the consumer loan sectors ($167 million), the auto financing sector ($64 million), the business and consumer services sector ($353 million), the construction, real estate and building sector ($127 million), etc.

·       Subsequent to the published statistics, to identify and enumerate the potential losses in the Palestinian economy, especially in the private sector and the individuals...and establishments that stopped work since the start of the Palestinian government's campaign to combat the spread of the global Corona pandemic...this government must consider appropriate compensation for this sector after an expected and hoped-for recovery period in the future, which we hope will not be far away.....!! We note here that the private sector has debts and overdue payments for goods and services provided to the public sector in the form of goods and services that exceed hundreds of millions of dollars. Also, the private sector—especially the financial and banking sector—has been and continues to finance the government to cover deficits in its balance of payments, and when private, civil society and state-profit companies cease operations, paralysis will confront the country if there are no public spending, government stimulus programs and appropriate real compensation, in addition to the other sectors that will be affected by the stagnation of the Palestinian economy. The gross domestic product is the economy in its entirety in the country, in which the private sector is the main source of funds to the public sector through the proceeds of its activities by means of taxes, customs and fees of all kinds, which finance public sector salaries and expenditures in general. Government spending will be minimal except by way of a local and external borrowing program, the latter being highly risky, especially if the IMF imposes conditions on grants whose motives are political. That will test the will—even international donors, who shortly before the Corona pandemic began to afflict the world, started to condition the disbursement of donated funds on names and entities that meet their conditions, i.e., no freedom for the recipient country to spend according to its own preferences. We hope God will not corner us with poisoned choices such as the "Deal of the Century" in order to lend or finance some sectors of our economy, which in most cases would be non-productive and related to environment, welfare, capacity building and gender.

·       In this context, there was the famous phrase by President Roosevelt in the 1930s, after assuming the presidency of the United States in the time of the Great Depression, in his decisive approach to support and stimulate the economy through wide government spending to make the economy strong. He said, "The only thing we have to fear is fear itself". (Note: The Arabic original quoted Roosevelt as saying "the penniless man is not a free man," which differs from the well-known quote; translator retained Roosevelt's famous intent.) But here in Palestine, on the other hand, we do not want our economy to be assassinated by donor or financing countries, and thus the assassination of our political decision and our core cause, Palestine. We are rich in experiences of strikes, uprisings, mutual aid and solidarity throughout history in the face of the siege from all directions. So let us rely on ourselves and cultivate every inch of our land. We ate cornmeal from sorghum and dates as substitute meals in earlier days and life continued.... Let our student children and teachers continue education via electronic platforms, and let everyone solidarize to help students who do not have Internet broadcasting. Education is a fundamental element in society; it must continue healthy and must not stop. Even our schoolchildren—parents must cooperate to fill the temporal gap caused by school closures and continue teaching the children...until the cloud of this pandemic lifts. They are a trust upon our shoulders and they are the future generations for national construction..!!!

·       Below we list the types of activities and the number of establishments operating in the Palestinian economy, to assess how much our economy is affected in this crisis according to this distribution...

·       Mining and quarrying sector.. In the West Bank it employs 303 establishments distributed as follows: Jenin Governorate 15, Tubas and the Northern Jordan Valley 2, Tulkarm Governorate 5, Nablus Governorate 51, none in Qalqilya, Salfit 4, Ramallah and Al-Bireh 16, Jericho none, Jerusalem 7, Bethlehem 14, while in Hebron the establishments in this type of activity reached 189 establishments. As for the Gaza Strip, the number of establishments operating in this type of activity (mining and quarries) was 24 establishments distributed as follows: North Gaza Governorate 1, Gaza City 19, Deir al-Balah 3, Khan Yunis 1, and none in Rafah.

·       Manufacturing sector: In the West Bank about 15,098 establishments operate, distributed as follows: Jenin 1,708 establishments, Tulkarm 982, Nablus 2,805, in Qalqilya 646, in Salfit 568, in Ramallah and Al-Bireh 1,866, in Jericho 117, in Jerusalem 1,235, and Bethlehem 1,466, while in Hebron the number of establishments operating in this type of activity reached 3,504 establishments... ...As for the Gaza Strip, the number of establishments operating in this type of activity (manufacturing) was 4,687 establishments distributed as follows: North Gaza Governorate 857, Gaza City 1,856, Deir al-Balah 621, Khan Yunis 847, and in Rafah 506 establishments...in this type of activity

·       Electricity, gas, and air conditioning supply sector: In the West Bank 69 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 9, Tubas 7, Tulkarm 7, Nablus 10, Qalqilya 1, Salfit none, Ramallah and Al-Bireh 7, Jericho 1, Jerusalem 8, Bethlehem 4, and Hebron 15... ...As for the Gaza Strip, the number of establishments operating in this type of activity reached 45 establishments distributed as follows: North Gaza Governorate 4, Gaza City 22, Deir al-Balah 6, Khan Yunis 4, and in Rafah 6 establishments...in this type of activity...

·       Water supply, sewerage, waste management and remediation activities sector: In the West Bank 232 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 48, Tubas 21, Tulkarm 47, Nablus 27, Qalqilya 28, Salfit none, Ramallah and Al-Bireh 17, Jericho 3, Jerusalem 10, Bethlehem 14, and Hebron 17... ...As for the Gaza Strip, the number of establishments operating in this type of activity reached 289 establishments distributed as follows: North Gaza Governorate 90, Gaza City 57, Deir al-Balah 28, Khan Yunis 86, and in Rafah 28 establishments...in this type of activity...
- Construction sector: In the West Bank 589 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 46, Tubas 12, Tulkarm 30, Nablus 110, Qalqilya 18, Salfit 5, Ramallah and Al-Bireh 176, Jericho 6, Jerusalem 34, Bethlehem 47, and Hebron 105... ...As for the Gaza Strip, the number of establishments operating in this type of activity reached 286 establishments distributed as follows: North Gaza Governorate 34, Gaza City 153, Deir al-Balah 37, Khan Yunis 44, and in Rafah 18 establishments...in this type of activity

·       Wholesale and retail trade; repair of motor vehicles and motorcycles sector: In the West Bank 54,605 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 7,597, Tubas 995, Tulkarm 4,111, Nablus 8,637, Qalqilya 2,252, Salfit 1,382, Ramallah and Al-Bireh 7,023, Jericho 692, Jerusalem 5,315, Bethlehem 4,213, and Hebron 12,388...As for the Gaza Strip, the number of establishments operating in this type of activity reached 26,642 establishments distributed as follows: North Gaza Governorate 4,614, Gaza City 10,467, Deir al-Balah 3,376, Khan Yunis 4,805, and in Rafah 3,380 establishments...in this type of activity

·       Transport and storage sector... In the West Bank 1,219 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 159, Tubas 19, Tulkarm 95, Nablus 161, Qalqilya 51, Salfit 24, Ramallah and Al-Bireh 247, Jericho 14, Jerusalem 176, Bethlehem 113, and Hebron 160...As for the Gaza Strip, the number of establishments operating in this type of activity reached 520 establishments distributed as follows: North Gaza Governorate 110, Gaza City 223, Deir al-Balah 74, Khan Yunis 65, and in Rafah 48 establishments...in this type of activity...

·       Accommodation and food services sector... In the West Bank 5,910 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 746, Tubas 84, Tulkarm 457, Nablus 1,000, Qalqilya 221, Salfit 149, Ramallah and Al-Bireh 1,011, Jericho 106, Jerusalem 669, Bethlehem 536, and Hebron 931...As for the Gaza Strip, the number of establishments operating in this type of activity reached 2,390 establishments distributed as follows: North Gaza Governorate 395, Gaza City 928, Deir al-Balah 336, Khan Yunis 460, and in Rafah 301 establishments...in this type of activity...

·       Information and communications sector... In the West Bank 634 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 59, Tubas 6, Tulkarm 46, Nablus 92, Qalqilya 26, Salfit 7, Ramallah and Al-Bireh 216, Jericho 11, Jerusalem 53, Bethlehem 41, and Hebron 77...As for the Gaza Strip, the number of establishments operating in this type of activity reached 379 establishments distributed as follows: North Gaza Governorate 38, Gaza City 231, Deir al-Balah 38, Khan Yunis 51, and in Rafah 31 establishments...in this type of activity...

·       Real estate activities sector... In the West Bank 293 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 66, Tubas 1, Tulkarm 9, Nablus 44, Qalqilya 7, Salfit 1, Ramallah and Al-Bireh 84, Jericho 4, Jerusalem 20, Bethlehem 15, and Hebron 42...As for the Gaza Strip, the number of establishments operating in this type of activity reached 119 establishments distributed as follows: North Gaza Governorate 14, Gaza City 69, Deir al-Balah 7, Khan Yunis 9, and in Rafah 20 establishments...in this type of activity...

·       Financial and insurance activities sector... In the West Bank 974 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 82, Tubas 21, Tulkarm 63, Nablus 140, Qalqilya 38, Salfit 31, Ramallah and Al-Bireh 235, Jericho 23, Jerusalem 76, Bethlehem 88, and Hebron 177...As for the Gaza Strip, the number of establishments operating in this type of activity reached 417 establishments distributed as follows: North Gaza Governorate 54, Gaza City 190, Deir al-Balah 52, Khan Yunis 72, and in Rafah 49 establishments...in this type of activity...

·       Administrative and support service activities sector... In the West Bank 1,357 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 122, Tubas 27, Tulkarm 85, Nablus 209, Qalqilya 48, Salfit 23, Ramallah and Al-Bireh 251, Jericho 41, Jerusalem 130, Bethlehem 140, and Hebron 281...As for the Gaza Strip, the number of establishments operating in this type of activity reached 670 establishments distributed as follows: North Gaza Governorate 138, Gaza City 229, Deir al-Balah 90, Khan Yunis 121, and in Rafah 92 establishments...in this type of activity...

·       Professional, scientific and technical activities: In the West Bank 3,677 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 358, Tubas 67, Tulkarm 225, Nablus 524, Qalqilya 112, Salfit 76, Ramallah and Al-Bireh 905, Jericho 45, Jerusalem 290, Bethlehem 285, and Hebron 790...As for the Gaza Strip, the number of establishments operating in this type of activity reached 1,294 establishments distributed as follows: North Gaza Governorate 174, Gaza City 662, Deir al-Balah 154, Khan Yunis 195, and in Rafah 109 establishments...in this type of activity...

·       Arts, entertainment and recreation activities: In the West Bank 2,096 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 245, Tubas 44, Tulkarm 200, Nablus 321, Qalqilya 98, Salfit 89, Ramallah and Al-Bireh 375, Jericho 40, Jerusalem 187, Bethlehem 173, and Hebron 324...As for the Gaza Strip, the number of establishments operating in this type of activity reached 954 establishments distributed as follows: North Gaza Governorate 179, Gaza City 318, Deir al-Balah 144, Khan Yunis 146, and in Rafah 167 establishments...in this type of activity...

·       Education activities: In the West Bank 4,467 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 548, Tubas 109, Tulkarm 317, Nablus 621, Qalqilya 170, Salfit 159, Ramallah and Al-Bireh 613, Jericho 69, Jerusalem 463, Bethlehem 382, and Hebron 1,016...As for the Gaza Strip, the number of establishments operating in this type of activity reached 2,375 establishments distributed as follows: North Gaza Governorate 378, Gaza City 867, Deir al-Balah 343, Khan Yunis 477, and in Rafah 310 establishments...in this type of activity...

·       Human health and social work activities: In the West Bank 5,092 establishments operate in this type of activity, distributed across the governorates as follows: Jenin 569, Tubas 72, Tulkarm 313, Nablus 671, Qalqilya 159, Salfit 112, Ramallah and Al-Bireh 906, Jericho 78, Jerusalem 465, Bethlehem 493, and Hebron 1,254...As for the Gaza Strip, the number of establishments operating in this type of activity reached 1,741 establishments distributed as follows: North Gaza Governorate 240, Gaza City 719, Deir al-Balah 253, Khan Yunis 342, and in Rafah 187 establishments...in this type of activity

·       30-3-2020