RAMALLAH: The Palestinian Authority has urged the World Bank to intervene in its dispute with Israel over more than $400 million in withheld tax revenues, senior Palestinian sources told Arab News.
The call comes amid warnings of “an existential threat” to the PA because of dwindling financial support from the US, EU and Arab nations, as well as the shortfall in tax income.
Palestinian Prime Minister Mohammed Shtayyeh and Finance Minister Shukri Bishara met World Bank senior directors in Ramallah on March 22 and urged the bank to put pressure on Israel over the withheld tax revenue.
Israeli deductions from tax it collects on behalf of the PA reached $400 million last year, 42 percent of this year’s budget deficit, Bishara has said.
Taxes collected by Israel make up about half of the PA’s income. However, under a 2018 law, Israel calculates how much it believes the PA has paid in stipends to militants, and deducts that amount from the taxes it collects.
The shortfall in revenue, and a halt to US, EU and Arab financial support for the PA have led to “a financial crisis that forms an existential threat to its survivability,” a senior Palestinian official told Arab News.
At the Ramallah meeting, the two Palestinian leaders also discussed World Bank support for projects in the Palestinian territories, saying that development is essential to create job opportunities among youth and university graduates.
Shtayyeh reviewed administrative and financial reforms, adding that “these efforts must be accompanied by international pressure on Israel to stop its unjust deductions from our funds, release the withheld funds and resume international support for Palestine.”
A political solution is needed to ensure effective and practical improvements in living conditions, the Palestinian PM said.
Bishara told World Bank officials that the Palestinian leadership is working under “exceptional conditions unlike any faced by other countries.”
PA officials pointed to “Israeli violations that impede financial and development progress in the Palestinian territories.”
The World Bank manages aid provided by some European and Arab countries that are reluctant to provide direct support to the PA, supporting low-income families, and covering the salaries of public sector employees and several small projects through a trust fund.
However, there are unconfirmed reports that the fund is running low as many countries have ended their financial support for the authority.
Samir Hulileh, Palestine’s former deputy finance minister, told Arab News that in addition to the financing program that the World Bank undertakes for the PA, giving it $40-$50 million annually, “its reports and estimates on the performance of the authority greatly affect donor countries’ decisions” on further support.
“The World Bank prepares periodic reports on how the PA performs financially and on the growth of the economy. It plays a central role in directing donors to support projects in the PA,” he said.