Initial Remarks on:
The Palestinian Authority Draft Budget for the Fiscal Year 2005
(A project for the intensification of collective poverty!!)

The figures and facts included in the Palestinian Authority Budget for the fiscal year of 2005 have revealed a number of trends and indicators that shall adversely impact the entire life of the Palestinian people throughout the West Bank and Gaza Strip.

1) The PA budget indicated an anticipated increase in the domestic revenues by 33% compared to the revenues of the year 2004. This is so despite of the following projected indicators:
    * an increase in the export value by 6.2%
    * an increase of imports by 36.5%
    * retreat of labor remittances by 3.3%
    * increase of unemployment by 1.7%
    * absence of actual growth in employment and poor growth in the investments of the private sector by 5%
    * draw back in the value of the GNP per capita
    * minor growth in the public and private sectors' employment by 1.5-2%
    * shrinking in the share allocated for developmental expenses

By looking at the above-mentioned expected percentages, one can see a large imbalance between the projected indicators and the anticipated increase in the local revenues. This poses imperative questions: How will it be possible to achieve these enormous domestic revenues? Is it by increasing the tax value, or by issuing and imposing new taxes?

In both cases, the impoverished grassroots are going to pay the price and consequently to be the major victim of the PA draft budget.

Isn't it the first advice of the international monetary institutions most notably the World Bank to the Palestinian Authority regarding the undertaking of internal reforms?!

2) The share (the allocated part for) of the Ministry of Interior and National Security mounts to 24.23% of the capital and running expenses and to 27.61% of the running expenses of the PA budget for 2005 compared with:
     * the share of the developmental expenses amounting to 12.89%, which forms almost half of the budget allocated for the Ministry of Interior (MOI);
    * the allocation for all ministries and governmental institutions concerned with economic development including the Ministry of Agriculture (MOA) is no more than 2.11%, which is less than one tenth of the allocated share of the MOI ;
    * the share of the Ministry of Health (MOH) is 7.61%, which constitutes less than one third of the MOI share;
    * the allocation for the Ministry of Labor and Social Welfare amounts to 16.58%, which constitutes 68% of the MOI share;
    * the share of the Ministry of Education reaches 14.1%, which is 58% of the MOI share

It is apparent that the "security" issue is on top priorities of the PA budget for 2005. This comes at the expense of the other crucial issues most notably the developmental concerns. Therefore, the projected budget is far reaching the priorities of the Palestinian people especially the latter's welfare and steadfastness major concerns. Furthermore, it reveals a tight link with political and economic priorities of foreign powers namely the Americans and Israelis.

3) The PA foreign loans amounted to US$ 892 million by the end of 2003, which constituted 80% of public revenues and 39% of GDP . The share of the Palestinian individual of the net foreign loans burdens that were due by 16/10/2004 reached US$ 267, which means the share of the family consisting of 7 members reached US$ 1869. As one can see the huge size of foreign loans excluding the internal debt to domestic sources impose heavy burdens on the Palestinians and entail adverse consequences on the Palestinian people most notably mounting poverty and gross deterioration in people's living conditions instead of being a tool of economic and social growth for the Palestinian family.

4) There is a vast gap between exports and imports. As indicated in the PA budget for the year 2005, the imports are more than seven times bigger than exports. This thing reveals the immense imbalance correlation with the external market.

5) The total budget allocated to developmental projects is distributed as follows:
    * 28% for constructions, roads and bridges
    * 33% for water and energy;
    * 2.3% for infrastructures;
    * 36.7% for strategic projects;
    * 8% for agricultural projects;
    * 2.7% for the projects of the National Economy Ministry;

These afore-mentioned indicators pose a decisive query regarding the purpose of the PA persistent marginalization of the land development and productive projects. The latter in our opinion present the most crucial factors for creating national steadfastness and sovereignty.

6) The allocation for the projects that target security is double the share of the projects targeting the political prisoners and the released, it also comprises 11 times bigger than the youths' projects.

7) In terms of the ratio of salary and developmental allocations one can notice the following:


    * The total salaries of the civil servants comprise 50.2% of the entire budget allocated to the ministries and public institutions for 2005, whereas the developmental and capital expenses represent only 3%.


    * The total salaries of civil servants in the economic development institutions and ministries comprise 79% of the total budget allocated for these ministries, compared to 2% dedicated for the developmental expenses.


    * The salary allocations for security forces reach 78.3%.


    * The total budgetary allocations for the salaries of civil servants in the social welfare ministries and institutions amount to 40.6% compared to 0.7% for developmental expenses.

As such we can conclude that the allocations for wages and salaries represent 40.4% of the Palestinian Authority draft budget for the year 2005.

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