The Culture of Crises

·       The Palestinian government has taken and is taking measures and steps under the Emergency Law, which was declared by His Excellency President Mahmoud Abbas, whether administrative measures, health measures, or economic measures. It has taken some steps regarding recent measures, such as postponing payment of loan installments and debts due to banks for a period of 4 months, in order to provide part of the liquidity for individuals to confront the crisis of the spread of the disease and its economic consequences. With the home quarantine measures and the possibility of their extension, economic activity has largely stopped, which constitutes an upcoming burden on the state to face the economic repercussions of the epidemic. So how do we deal with the money....?

·       How will the Palestinian government procure the funds necessary to spend on precautionary and preventive programs to contain the spread of the disease, in addition to assisting the parties affected among the private sector and individuals, compensation and increased government spending, in light of scarce financial capabilities....!!

·        You are not strangers..!! Here is a summary of our general financial situation according to the official statistics on the Ministry of Finance and Planning page for the month of January 2020..:

·        The total public debt of the Palestinian National Authority as it appeared in January 2020 amounted in total to $2,868 million, of which local debt amounted to $1,627 million, which consists of bank loans amounting to $934.7 million; about 65% of these bank loans are short-term loans. In addition to banking facilities that amounted at the end of January 2020 to $372.5 million; and loans from the Petroleum Authority amounting to $305 million; in addition to loans from other institutions, meaning the Orphanage House and the Palestinian Alimony Fund, about $15 million. As for external debt, it reached $1,241.1 million at the end of January 2020, of which $764 million is to Arab financial institutions, such as the Al-Aqsa Fund amounting to $513 million and the National Bank of Qatar amounting to $200 million, the Islamic Development Bank amounting to $36.7 million. The Arab Fund for Economic and Social Development amounted to $14.2 million. As for international and regional institutions, their debt amounted to $336.1 million, where the World Bank debt amounted to $272.9 million, the European Investment Bank $38.6 million, OPEC $22.4 million. As for loans under bilateral agreements, they amounted to $141 million, of which $77.4 million with Spain and $63.6 million with Italy....

·       Added to the total of this public debt is 4,698 million shekels, equivalent to $1,358 million (one billion three hundred fifty-eight million dollars), representing the net cumulative arrears until the end of January 2020... More than 47% of this amount are arrears to the private sector. The remainder pertains to "Other"!

·       It is known that most of our state's revenues are from direct and indirect taxes, which will certainly decrease as a result of work stoppage measures. We have been mainly affected in the tourism sector, transportation, small commercial businesses and enterprises, the services sector, the industry sector, the retail sector, and the entertainment sector such as sports clubs, cafes and restaurants, in addition to human resources: the sector of workers who work inside the Green Line and in the Israeli settlements in the West Bank, whose incomes constitute a primary source of purchasing power in the markets, in addition to taxes due on income tax withholdings, 75% of which used to be remitted for workers inside the Green Line and 100% for workers who work in the Israeli settlements in the West Bank. Such inflow of revenues will diminish, especially since Israel, pursuant to the Paris Economic Protocol, used to remit such withholdings to the Palestinian Treasury. All of this will result in a decline in tax revenues, which will force the state to borrow, despite the high local and external indebtedness relative to an economy like the Palestinian economy!

·       Total domestic revenues for January – January 2020 amounted to 597.7 million shekels (equivalent to $173 million). Of these domestic revenues, tax revenues amounted to 376.2 million shekels in 1-2020, non-tax revenues amounted to 112.3 million shekels, and designated collections amounted to 109.2 million shekels (taxes and revenues allocated to local government bodies - 90% property tax and 50% road and transport tax). As for clearance revenues, they amounted for the same month (1-2020) to 658.6 million shekels...

·        As for what paid expenditures in the same month of 2020 (1-2020), total salaries and wages for that month amounted to 479.3 million shekels (equivalent to $139 million), noting that the government's contribution under the name "social" which amounted to 55.2 million shekels in the same month (a liability), was not paid and not remitted by the government. There were other expenditures paid in the same month, such as transfer expenditures which amounted to 159.7 million shekels..

·       It is clear that on the revenue side for January – January of this year and before the emergence of the Corona epidemic, clearance revenues, which are remitted from the Israeli side, constituted about 54% of total net revenues for that month. Certainly all of these monthly revenue figures, all of which come from domestic revenues from taxes and fees and from clearance—which itself is the total of direct and indirect taxes and customs—will be greatly affected, since imports will decline during this emergency period in which the spread of the Corona epidemic is being contained, and due to the need to compensate sectors devastated by the circumstances accompanying the government's measures to suspend most sectors of the Palestinian economy. Workers inside the Green Line and settlement workers, whose tax withholdings were remitted within the clearance bill, will be affected and will stop as long as there are no workers working, not to mention the loss of liquidity of these workers' wages in local markets and household expenditures. Also, the rest of the clearance bill derives from imports from Israel and abroad, purchases from those markets and customs duties. All of that will plunge downward and will create enormous pressure on the Palestinian government in government spending and covering monthly expenditures and compensations...

·       Attention inside will be focused on the financial banking sector, natural and juridical persons, to be a safe haven for the government; it is necessary to access it more than the sector already bears debts owed to them by the state for financing and other matters. Borrowing from this sector will be certain regardless of previous debts, and the private sector will be in a great predicament both because of reduced economic activity due to the Corona epidemic conditions and because of its dues and accumulated arrears not paid by the government as we stated above. Pressure on the private sector will be great in the upcoming transitional phase which will follow the period of government measures to control and contain the spread of this epidemic in the country. There will be greater public calls for social responsibilities from the private sector, especially in light of rising unemployment rates that will cast their painful weight after the end of government measures, and the beginning of the phase of quantifying losses and compensating as much as possible, if that is possible... As for external borrowing, it will be according to conditions, to my knowledge, from international financial institutions, and there may be scope for receiving aid from the international community; decisions will be taken after meetings of the Group of Twenty countries, which met yesterday by telephone, and after that there will also be international meetings regarding debts with the possibility of postponing installment payments or canceling part of the debts of countries according to their damage from the epidemic. The path of such compensations and international assistance is not clear.

·       All of these losses have not yet been quantified separately, to our knowledge, because efforts are focused on combating the spread of the epidemic and containing it.

·        We are required in Palestine to set up an emergency budget that accompanies the government's regular budget for 2020, and to develop plans to secure financial resources and international assistance to stimulate the economy, especially since we are a state under occupation, until the Palestinian economy recovers. In addition, consideration should be given to restructuring external debts and demanding their exemption for Palestinians. As for local debt, it is necessary to put plans in place to repay it, especially since it concerns the private sector for the most part in addition to some public funds that concern the public sector, and to appeal to some Arab countries to fulfill their previous commitments to secure a financial safety net for Palestine..!! Efforts must be joined, individuals and groups, to support the Palestinian economy, and that must be accompanied by austerity on the part of the people, tightening belts on stomachs to confront this black crisis... Each Palestinian inside and outside must bear individual responsibility to stand by the homeland according to his skills and capacities in such circumstances that rival those of total war. The technological, educational and historical skills that Palestinians possess across the world are an intellectual and cognitive wealth comparable to the richest resources. We are truly not poor...!!

· In this regard, Palestine, under these global circumstances concerning the virus’s spread across the countries of the world, the voice of Palestinian justice and its suffering from the virus of occupation will become less audible in the international community. In light of the world’s priority scale, time in their view is devoted to combating the virus and the need to focus on regional cooperation in handling the epidemic, and therefore they will drive us to deal with the Israelis for joint handling of this humanitarian, global issue. Consequently, Palestine will also lose by not continuing to heat up its demands to remove the Zionist military occupation in these days on international platforms.. and the tempo of popular resistance activities.. against the occupation will decrease, due to movement restrictions in the country and the full lockdowns imposed by the Israelis, in addition to the fact that minds, by virtue of the huge media mobilized to show that the sole concern of the world’s countries is combating the epidemic, will be directed to containing losses and addressing conditions arising.. from this epidemic, then afterwards it will be addressing the economic consequences of the epidemic for which countries will plunge into borrowing and debt.. and agreements that will limit freedom of speech even for states..!!

· There are many and large concerns for the Palestinian state that it is necessary to prepare the equipment to describe and classify in order for us to be ready to address them, in addition to the many lists of concerns that the government is decisively and continuously carrying out, despite the scarcity of material resources and its lack of freedom of movement and administrative jurisdiction over the entire Palestinian land occupied in 1967. Among these preparations is forming committees—if they are not already formed—to identify the sectors that will receive actual assistance and support... and preparing plans for how to address the economic repercussions, such as preparing a paper with instructions for banks to provide low-interest loans for many of the most affected categories like restaurants and individual damaged shops, and setting clear criteria for comprehensive operations to define damage and its degrees for individuals and commercial businesses, and to confine it to actual damage such as tourism and transportation companies and some factories and recreational activities like sports clubs.. and vendors and small business projects.. and all other affected professions.. etc.

· Increasing civil servants’ salaries by moderate percentages to increase purchasing power in the markets after studying the effects of that on the government’s financial situation. Or granting a one-month salary bonus.. for example...
Setting ceilings for high salaries of managers in the private sector and also the public sector... so that they are commensurate with the current circumstances, and to review them professionally to keep pace with the country’s conditions...
Reconsidering the prices of some goods and public services including energy to keep up with recent developments... in the world in terms of oil prices, and others..

· Restructuring taxes according to effective plans, in order to accompany the changes that have occurred in economic activity... and especially small commercial businesses and some types of service activity...
Raising the degree of state intervention in commercial markets to a level that relatively limits the full freedom of market forces in this emergency period, such as monitoring prices and quality, etc., and enacting the necessary emergency legislation regarding the private sector..."

· Supporting and strengthening social and health safety nets in Palestine.. and initiating implementation of the Palestinian Social Security project once the Palestinian economy recovers.. because it is an essential and strategic demand for the working class.. in the private sector..

· As for relations with the Israelis, we see that it should be demanded to obtain full security, organizational, administrative and legal responsibility over areas classified as Area C under Israeli control, where hundreds of thousands of Israeli settlers reside on Palestinian land, with all its resources in its soil, sky and surface.. We have seen precisely how the government’s instructions regarding the state of emergency could not extend its authority over the entire Palestinian countryside in general, due to Israel’s opposition to the Palestinian National Authority assuming these tasks... and had it not been for the people’s natural cooperation with the government and the assistance of organizational forces and municipalities and community actors, there would have been no protection for Palestinians from the effects of the epidemic... Also, demanding the lifting of the siege on the Gaza Strip and the release of Palestinian prisoners.. in Israeli prisons are important issues if the state can mobilize the international community to pressure Israel to comply with these demands. So that the international community does not forget that we are still under the hateful.. prolonged.. long Israeli occupation.. which appeared in the Deal of the Century.. where the Israeli occupation was not mentioned, nor was the Palestinian history even mentioned.. in the content of the pages of the ominous unacceptable deal.. neither politically nor economically!!.. We face a difficult test; shirking the duty and failing to participate in construction and development will lead to the loss of what remains of the homeland...!!

· Date 27-3-2020