-Smotrich’s detention of clearing funds delays the payment dates for public employees’ salaries 
 -A stifling financial crisis facing the authority is the most dangerous since its establishment 
 -The Prime Minister stops the appointment of ambassadors and orders the withdrawal of cars from senior employees 
 Analysts: The aggression against the sector caused a decline in foreign revenues and a decrease in local collections

For the first time since its establishment, the Palestinian National Authority is facing a stifling financial crisis, due to Israel’s withholding of clearing funds, which has confused the Ministry of Finance in announcing a specific date for disbursing employee salaries for the month of April, in addition to the decline in the Authority’s financial revenues, due to the war on the Gaza Strip.

“Al-Quds” learned from informed sources that Prime Minister Dr. Muhammad Mustafa suspended the previously announced appointments of a number of ambassadors from the ministers of the previous government, and that he instructed the withdrawal of cars from senior employees in all ministries, within the framework of the policy of austerity, rationalization of consumption, and reduction of expenses, in implementation of the economic reform policy that he announced in his response to the letter of assignment to form his government on March 15 this year.

Prime Minister Dr. Muhammad Mustafa accused Israel of placing obstacles in all aspects of life, depriving the Palestinians of their financial sources, and deducting more clearance funds.

The peak of piracy reached the height of the determination of the Occupation Finance Minister, Bezalel Smotrich, to confiscate three billion shekels of clearing funds to be used for the reconstruction of settlements in the “Gaza envelope” and to reduce the cost of living in Israel, stressing that he will continue to work to enact a law in this regard.

The economic analyst, Dr. Nasr Abdel Karim told “Al-Quds”: “The financial crisis resulting from Israel’s withholding of clearing funds is not new, but rather cumulative, but it worsened after the seventh of last October, in light of options to resolve the crisis, especially after the Israeli government’s extremist position and incitement.” on clearing funds.

Abdel Karim points out that the clearing funds due, even if they were transferred, decreased by 30 percent, due to the decrease in trade with the Gaza Strip, which declined due to the war, as the clearing funds, before October 7, amounted to more than 800 million shekels per month.

According to Abdel Karim, the authority’s revenues have declined sharply, with liquidity currently reaching 600 million shekels per month, available from local collections, in addition to Algeria’s transfer of $55 million to the treasury, but all of that money is not enough to pay the authority’s expenses, most notably salaries, “so we are facing a real financial crisis.” A worsening situation witnessed by the Authority for the first time since its establishment, preventing it from being able to fulfill its financial obligations.”

Abdul Karim points out that the percentage of salaries disbursed during the next stage may not be convincing to employees, and the employee has the right to take his salary or part of it, and perhaps part of the salaries will be paid next week, but the crisis is difficult, in light of the insufficient revenues for the treasury, most of which come from Clearance funds, at a time when foreign aid stopped, and local revenues from trade in the West Bank and Gaza decreased significantly after October 7, due to the Israeli aggression.

Abdel Karim notes that the authority faces an important choice by resorting to an austerity plan and rationalizing expenditures, limiting government spending to priorities, and improving tax revenues without burdening citizens.

Abdul Karim believes that despite this, the crisis remains difficult and unprecedented, and the solution lies in a political solution rather than a technical one, which is open to a political horizon that would restore the flow of money to the authority. Without that, the financial situation is difficult and may worsen and deepen.
For his part, Professor of Economics at An-Najah University, Dr. Nael Moussa told “Al Quds” “The current stage is difficult and more complex, but I believe that it will be resolved, even partially, during the coming period, because Israel is avoiding financial collapse so that the security situation does not deteriorate.”

Moussa continues: "We have become accustomed to this Israeli policy, which ensures that successive Palestinian governments face financial crises, but this crisis has deepened and reached the brink of collapse, in the recent period, due to the presence of the extremist Israeli government."

Moussa points out the Authority’s exorbitant salary bill, as it spends 67% of its revenues on salaries for 170,000 employees, but the current crisis places the Authority in front of a dangerous and difficult stage that will only be overcome if there is a political horizon, noting that the Authority had a historic opportunity in front of it during the past 25 years. The past, by implementing the policy of economic disengagement from the occupation, but now we have reached a dead end, with which only a fair political agreement will work.

The warnings come from the difficulty of the current stage financially, in light of the government’s discussion in its last session of the financial crisis that is afflicting it as a result of Israel’s continued withholding of about 6 billion shekels, and the increase in monthly deductions from clearing, which decreased by 60%, in addition to the decline in public revenues due to the deteriorating economic conditions. As a result of the Israeli aggression on the Gaza Strip since last October.

According to its statement, the government confirmed that it had received a general debt from the Palestinian Authority exceeding $11 billion, after adding the debts owed to the Public Retirement Authority and the debts of foreign banking institutions, in addition to arrears to public employees, arrears due to suppliers and service providers, and the debts of local banks.

The Prime Minister, Dr. Muhammad Mustafa to the efforts made by the Palestinian leadership and the government with international partners to pressure Israel to release the funds detained in Norway, which amounted to $423 million as of last March, and that if the efforts succeed in recovering them, the government will be able to pay a small portion of the dues of employees and suppliers as companies. Medicines and other eligible categories, to ensure the continued supply of some goods and the provision of basic services.

The government confirmed that until some of the withheld funds are released, and any amounts of expected foreign aid arrive, it will disburse the salaries of public employees for the month of last March, according to a ratio that takes into account thousands of people with low and medium salaries, as the Ministry of Finance will determine the percentage and date of disbursing salaries. Immediately upon receipt of the clearing.

According to the government’s statement following its last session, although it has drawn up plans for financial stability until the end of the year, the Ministry of Finance and other competent authorities will reconsider the distribution of available public money according to national priorities, while assigning all ministries and government bodies to follow up on previous Cabinet decisions. Regarding general austerity measures.