Hosni Shreitah- Palestine Economy Portal

Data from the Ministry of Finance and Planning showed that the public debt owed by the government rose during the first eight months of this year by 11 percent to 11.35 billion shekels.

The data indicated that the total domestic debt amounted to approximately 6.6 billion shekels, while the external debt amounted to about 4.45 billion shekels.

The rise in public debt to a new record came due to the clearing crisis, in addition to the COVID-19 pandemic after the crisis affected the volume of domestic revenues for months.

Public debt includes all the sums that the government borrows from the Palestinian banking system or international institutions, while it does not include debts owed by the private sector.

Commenting on the rise in public debt, economic analyst Nasr AbdulKarim said that the government has resorted to borrowing from local banks and international agencies since the beginning of the clearing crisis in order to cover obligations for the salary bill amounting to 800 million shekels per month.

The government has refrained from receiving clearance funds since May, in implementation of the leadership’s decision to stop all relations with Israel after the latter announced its intention to annex Palestinian lands.

The salary bill is about 550 million shekels a month, but with the addition of semi-salaries (retirees, families, and those with certificates and social development allocations), the salaries rise to 800 million.

Mr. Nasr added that the treasury does not have all the liquidity to cover its commitment, noting that the government's monthly expenditures amount to 1.2 billion shekels, while the available local revenues amount to only 300 million shekels.

AbdulKarim said that the current solutions are limited due to the crisis, noting that receiving clearance funds will not suffice to pay off the public debt, but he stressed the need to manage the available liquidity by specifying priorities in addition to moving towards expanding tax collection, rather than increasing it.

He pointed to the importance of focusing on preventing tax evasion, estimated at $ 600 million annually, and working on increasing the effectiveness of the tax system.