Expenditure and Net Lending in Palestine

-        The total expenditure and net lending in actual terms amounted to 13,320 million shekel (ILS) (thirteen billion three hundred twenty million shekel (ILS)), down from expenditure and net lending on an accrual basis by 3,067 million shekel (ILS). Actually spent in 2020 (according to the Ministry of Finance and Planning statistics - Table No. 2), as follows:

·       Main expenditures:

-        Salaries and wages expenditure of 6,369 million shekel (ILS), representing 48% of total expenditure and net lending.

-        Government social contributions expenditure, of 223 million shekel (ILS), representing 2%.

-        Expenditure on the use of goods and services of 990 million shekel (ILS), representing 7% (specifically for public sector uses).

-        Transfer expenditures of 4,222 million shekel (ILS), representing 32%. (Details of spending items will be published in a later bulletin.)

-        Domestic and external interest of 138 million shekel (ILS), representing 1% (and includes external and domestic interest).

-        Provisions payments of 182 million shekel (ILS), representing 1%. (Specifically payments to local bodies: 90% of property tax and 50% of road tax had been previously collected in revenues.)

-        Minor capital expenditures of 29 million shekel (ILS).

·       Net lending of 1,167 million shekel (ILS), representing 9%. (Related to debts and receivables from local bodies and the electricity bill.)

-        Thus the primary deficit, the difference between actual net revenues and total actual expenditure and net lending, amounted to (1,432 million shekel (ILS)) negative…..where net revenues amounted to 11,888 million shekel (ILS) minus total expenditure and net lending of 13,320 million shekel (ILS)…in 2020.

-        To this primary deficit of (1,432 million shekel (ILS)) is added an amount of 572 million shekel (ILS) of development expenditure, making the total deficit (amount 2,005 million shekel (ILS)) (a financing gap) — two billion and five million shekel (ILS) — which needs to be repaid. We clarify below how this deficit was repaid:

-        This deficit (amount 2,005 million shekel (ILS)) was financed from the following funding sources:

·       First: (external budget support) for 2020 in the amount of 1,220 million shekel (ILS), and it comes from the following funding sources:

1-   Budget support) in the amount of 1,220 million shekel (ILS), and the budget support was from the following parties:

2-   Arab grants: in the amount of 132 million shekel (ILS). These are the following Arab countries: Saudi Arabia with 107 million shekel (ILS) (which donated 52 million shekel (ILS) in February 2020 and 55 million shekel (ILS) in March 2020), then Qatar with 22 million shekel (ILS), and Oman with 4 million shekel (ILS); as for Algeria, Egypt and Kuwait, they did not donate anything in 2020. It is clear that Arab support has been suspended for some time..unfortunately it was weak in its support...!!

3-   Donor countries: the total support from donor countries in 2020 amounted to 1,088 million shekel (ILS), and the donor countries and supporting foreign entities were as follows:

4-   France: paid 31 million shekel (ILS).

5-   The Palestinian-European Mechanism for Supporting and Managing Social and Economic Assistance: supported with 758 million shekel (ILS), which was spent as follows:

·        Civil service employees, retirees, civil police and civil defense, in the amount of 441 million shekel (ILS).

·        Support for social cases in the amount of 218 million shekel (ILS).

·        Support for Al-Quds hospitals in the amount of 99 million shekel (ILS).

-        The World Bank: donated 298 million shekel (ILS), of which 224 million shekel (ILS) were in the form of development grants...

·       Second: external development financing in the amount of 452 million shekel (ILS).

·       Third: net financing from local banks in the amount of 1,895 million shekel (ILS).

·       Fourth (deducted): an amount (1,562 million shekel (ILS)) was paid by the government as arrears for goods and services from previous years, to the private sector and other local sectors.

-        Note* The dollar exchange rate against the shekel (ILS) is at an average rate of 3.43 shekel (ILS)/USD in these data*

·       Transfer expenditures and their spending items in Palestine  

-        The total expenditure and net lending in actual terms in 2020 amounted to 13,320 million shekel (ILS), as noted above.

-        The actual transfer expenditures in 2020 amount to 4.221 billion shekel (ILS), which constituted 32% of total expenditure and net lending for 2020.

-        Below I clarify the public spending items for these actual transfer operations in 2020, which consist of seven main items and other subitems as follows:

-        First: item ("Benefits of social assistance"), in the amount of 1,627 million shekel (ILS) in actual terms, (a decrease) from the budget figures (accrual basis), by (407) million shekel (ILS). The item "Benefits of social assistance" consists of the following subitems:

1-    Subitem "Social assistance", where the value of its actual transfer expenditures amounted to 819 million shekel (ILS). (A decrease) in the value of "social assistance" by 243 million shekel (ILS), compared to the budget data (accrual basis).

2-    Subitem "Assistance to needy families", the value of actual transfer expenditures for this subitem amounted to 638 million shekel (ILS). (A decrease) by 127 million shekel (ILS) from the budget figures.

3-    Subitem "Unemployment benefits", and the value of its actual transfer expenditures amounted to 169 million shekel (ILS). (A decrease) by 37 million shekel (ILS) from the budget figures.

-        Second: item ("Social security benefits – civil and military pensions") in the amount of 2,168 million shekel (ILS).

-        An amount of 2,168 million shekel (ILS) represents the actual transfer expenditures for the item "Social security benefits – civil and military pensions", which (decreased) in value from the budget figures by 381 million shekel (ILS).

-        Third: item ("Payments to non-governmental organizations, civil society and universities") in the amount of 275 million shekel (ILS). The value of this item of actual transfer expenditures for 2020 increased over the figures in the budget by 154 million shekel (ILS).

-        Fourth: item (" Compensation for damages and emergency expenses"), in the amount of 88 million shekel (ILS). The actual value of "Compensation for damages and emergency expenses" decreased from the budget figures by 4 million shekel (ILS).

-        Fifth: item ("Support for local government") in the amount of 26 million shekel (ILS).

-        Sixth: item ("Other transfers") in the amount of 25 million shekel (ILS). These transfers under the name "other" actually decreased from the budget figures by 32 million shekel (ILS).

-        Seventh: item ("Educational subsidies and scholarships") in the amount of 10 million shekel (ILS). The actual value of these subsidies increased over the budget figures by 7 million shekel (ILS).

-        It is noteworthy that actual transfer expenditures decreased from transfer expenditures according to the budget data by 665 million shekel (ILS), and the mentioned decrease amounting to (665 million shekel (ILS)) was considered an amount among the "arrears" owed by the government, according to Table No. 3 related to "financial operations, revenues and arrears December 2020."

-        As for the responsibility centers through which transfer expenditures were channeled, Table No. 5B was reviewed and an analysis was made of how transfer expenditures were spent according to the budget (accrual basis) figures for 2020, which as we noted earlier amounted to 4,882 million shekel (ILS), with these actual expenditures decreasing by 665 million shekel (ILS) compared to the budget figures, as indicated above.

-        Table No. (5B) detailing expenditures by item and responsibility center for 2020 according to the budget (accrual basis) showed the details of the responsibility centers that received the spent transfer expenditures (according to the 2020 budget plan), as follows:

-        First: responsibility centers under the heading "Governance sector", where the total value of transfer expenditures for it amounted to 3,392 million shekel (ILS), and some of its main responsibility centers received transferred expenditures as follows:

·       (Governance sector)

-        Responsibility center " Pension allowances for retirees":

-        An amount of 2,511 million shekel (ILS) was allocated to this center according to the budget data from these transfer expenditures, and the actual transfer expenditures for this center fell to 2,168 million shekel (ILS), a decrease of 343 million shekel (ILS), as explained above.

-        Responsibility center "Institutions of the Palestine Liberation Organization (PLO)":

-        This center received transfer expenditures according to the budget data in the amount of 693 million shekel (ILS).

-        The remaining responsibility centers in the "Governance sector", which include several ministries and agencies, received 188 million shekel (ILS) of the total transfer expenditures for the "Governance sector", according to the 2020 budget figures.

·       (Infrastructure sector)

-        Second: responsibility centers under the heading "Infrastructure sector", where the responsibility center named "Ministry of Energy and Natural Resources" received transfer expenditures according to the budget data in the amount of 62 million shekel (ILS)...

·       (Foreign affairs sector)

- Third: Responsibility centers under the name sector " Foreign Affairs"

- The responsibility center named "Ministry of Social Affairs" received an amount of 1,383 million shekels of transfer expenditures according to the budget figures for 2020, while the value of actual transfer expenditures – cash basis – in 2020 for the item named "Benefits of social assistance" amounted to 1,627 million shekels.. an increase over the budget figures listed under the responsibility center "Ministry of Social Affairs, in the amount of 244 million shekels.

- Date 27 -3-2021