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Fatah Nablus Branch Secretary Muhammad Hamdan: “All of this pressure, all of this crime, and all of this terror that the Israeli occupation is carrying out and the settlers are carrying out will lead the region to a full-blown explosion. Allah willing there will be a Shireen [Abu Akleh] Intifada, a Jenin Intifada, a Jerusalem Intifada, and all of our people’s activity will be planted in this intifada in the defense of Jerusalem and Jenin. Allah willing this intifada will be the Liberation Intifada.”
[Official PA TV, Palestine This Morning, May 16, 2022
So while both groups mention the prisoner payments, neither of them suggest that the PA end the program.A significant part of the fiscal problem is structural. The PA raises virtually no revenue from Gaza and East Jerusalem, while in 2021 it spent about a third of its budget in these two areas— particularly in Gaza—mainly comprising civil servant salaries and pensions, and net lending. Neither does it raise any significant revenue from Area C in the West Bank. Furthermore, the PA and Israel disagree on the amounts that the Government of Israel should transfer to the PA under the Paris Protocol, the so-called “fiscal leakages” (estimated at about 2 percent of GDP annually). In addition, the PA disagrees with unilateral Israeli deductions from clearance revenue for so-called “prisoner payments” (which amounted to 1.3 percent of GDP in 2021).
But neither they nor the World Bank ever say that if the PA would just stop paying terrorist salaries, then a significant chunk of cash would immediately become available to them.The way out of the current fiscal crisis will require wide-ranging Palestinian policy actions. Staff discussed the benefits of adopting a broad-based strategy to contain and rebalance public spending, while boosting growth. As the Palestinian authorities have fewer policy tools compared to peers, systematic reform to the key drivers of non-discretionary spending—i.e., civil service salaries and benefits, transfer payments, the public pension scheme, the health care system, and fuel subsidies—are key.