2015 Activities

The Civil Society team for Public Budget Transparency held a dialogue session with the Ministry of Finance on the implementation of the 2015 budget

The Civil Society team for Public Budget Transparency held a dialogue session with the Ministry of Finance on the implementation of the 2015 budget

The Civil Society team for Public Budget Transparency in the West Bank and Gaza held a dialogue session on accountability and transparency in the general budget with the Palestinian Ministry of Finance. Finance Minister Shukri Bashara was absent from the session despite personally confirming his attendance, and then apologizing for not attending for the second time this year. General Manager Fareed Ghannam the Public Budget General Manager represented the Ministry in the session.

Deterioration in the Engagement of the Civil Society Chairman of the Board of Directors, Abed- Al-Qadir Al-Husseini, opened the session by expressing his regret for the absence of the Finance Minister despite of the previous agreement to attend. Husseini expressed hopes that a meeting between the Minister and the Civil Society Team would be held in October as promised by the Minister in his letter of apology.

Husseini pointed out the recent deterioration in cooperation between the Finance Ministry and civil society institutions, including the CSTPBT. Where a steady relationship of a transparent and unambiguous nature normally existed between the two parties in the past. He hoped that this relationship would improvement as in the past, highlighting that the Palestinian situation needs to be engaged in the formulation of general policies.

Abed-Al-Qadir also expressed his concern about the indicators that point to a deterioration in the transparency of the general budget and stressed the important role of the Ministry of Finance in improving this situation of enhancing the budget transparency, and keeping civil society engaged.

Ministry seeks to ensure value for money

Ministry of Finance representative Fareed Gannam described the perspective of the Ministry and indicated that the 2015 fiscal year is nearly at an end after a very difficult financial year. As Israel failed to transfer clearance funds (Maqasa), an emergency budget and a basic budget scenarios had to be drafted. He further clarified the desire of the Ministry to engage the civil society more in preparing a short-term budget plan for 2016-2018 prior to its approval and adoption as law.

Ghannam pointed out that the Ministry aims to reform public money management for the next budget and guarantee value for money in public services, which meanslower economic costs and higher quality and efficiency in line with good governance standards. The budget will also seek to increase reliance on local revenue and gradually reduce reliance on foreign aid.

Deterioration in the General Budget Transparency

The Civil Society Team made a presentaton and recommendations regarding the 2015 budget. The presentation discussed the results of general budget transparency tracker; This is an international tracker that evaluates the extent to which the basic eight documents had been published. The results show that the decline in 2015 was greater than in 2014, which also showed a decline, because the Ministry published three documents in 2014 compared with two documents in 2015.

This has a negative effect on the concept of community accountability because civil society and the civil society team do not possess the data required for accountability. It also affects the image of Palestine with other countries and its position on the scale of general budget transparency.

Legal violations concerning the presentation of the Budget Law Project

The CSTPBT pointed out legal violations of principles of transparency in the budget proposal to the Legislative Council two months prior to the end of the year. Application of Article 61 of the amended Basic Law of 2003 was not adhered to, nor even adopting the general budget no later than the end of the current year. The adoption of the general budget by the end of March in exceptional cases was also not adhered to this year. 

Merging Gaza reconstruction funds with the developmental budget lines

The Team also pointed out that allocations for the reconstruction of Gaza which have been merged with Palestinian National Authority expenses, creating confusion in budget expenses for development, which totaled 1.150 billion dollars, including 800 million dollars for Gaza reconstruction. The team had previously addressed the need for a separation of funds for Gaza in a completely separate account with exclusive supervision by a committee that includes the Prime Minister and Ministry of Finance in order to ensure maximum transparency.

Ambiguity Surrounding "Net Lending"

The CSTPBT described the ambiguity surrounding the term ‘net lending’. To ensure general budget transparency, it is crucial to understand the terms and conditions of estimates of net lending, especially since actual spending exceeded the sum allotted in the budget analysis and this could drain the PNA budget due to Israel deducting clearing funds.

The CSTPBT addressed the effect of a funding gap of 1,502 million shekels (about 32 million dollars per month) and the impact of an accumulated deficit on the general budget. They also addressed the steps or mechanisms that the Ministry of Finance needs to undertake to close this gap, especially as total expenditures had risen beyond the initial plan half way before the end of the budget term.

The Palestinian National Authority's general debt problem still exists despite declarations by government and the Ministry of Finance of reducing the general debt. This has not been achieved in the first half of the 2015 budget; on the contrary, the debt had increased by the end of June 2015 in comparison with the end of 2014 from 8,646.1 million shekels to 8,858.7 million shekels, an increase rate of 2.5%  in the total general debt.

Security expenditure consumes equivalent to the education and health budgets

Security allocations consumed the lion's share of the general budget as usual: In the first half of the budget for 2015, their expenses were equal those of the Palestinian Ministry of Education and the Ministry of Health. Salaries and wages continue to consume and deplete the greatest share of security expenditure to exceed the total budget of the Ministry of Health and Social Welfare combined.

Will 2016 witness a participatory approach?

The CSTPBT pointed out that problems and obstacles facing the general budget in Palestine have been consistent for several years. These are reflected in lack of transparency, an accumulated fiscal deficit, an increase in the overall debt, non-payment of past dues and a decline of the participatory approach in engaging with civil society. The team wondered whether the same approach will continue next year or if 2016 may witness a positive change.

The Civil Society Team from Gaza withdraws from the session 

The CSTPBT from Gaza expressed disappointment about the repeated absences of the Finance Minister, Shukri Bishara, from meetings and withdrew from the session. They considered this to constitute the sidelining of the role of civil society and citizens with regard to accountability.

Heated questions and candid answers

The audience at the session made observations about the budget, its direction and the policy of the Ministry of Finance. Observations included fundamental shortcomings in the structural drafting of the budget, and the decline in civil society involvement in drafting and supervising budget implementation (especially in the absence of the Legislative Council). The budget was also inconsistent with the Palestinian development plan. Health and education budgets are not given the  priority they deserve on the basis of the vital services they offer. The group also focused on the right to access information on the general budget.

Ministry of Finance representative Ghannam stated that the Ministry is striving to improve the relationship with civil society institutions. He also extended a personal invitation from the Ministry of Finance to the CSTPBT and civil society institutions to participate from the beginning stages in the preparation of the 2016-2018 budgets.

Ghannam added that the Ministry’s belief in the principle of transparency is demonstrated in the publication of monthly reports. The government hopes to attain growth of 8.6% from total net revenue this year through revenue reforms such as broadening the tax base to include liberal professions (doctors, engineers, lawyers, etc.), amendments to the Investment Promotion Act, and amendments to local fees to increase revenues.

Revenue from clearing is anticipated to improve after mobilizing the Jerusalem Electricity Company, and negotiations with the Israeli Ministry of Finance. The Palestinian government is working on resolving outstanding issues such as missing revenue and unilateral deductions.

Ghannam added that there is a plan in progress to lower the net debt to 20% by forbidding municipalities from using electricity fees for other purposes, for example, operational expenditures. In return, the Palestinian government will commit to a monthly transfer of municipality revenues from property tax and transportation fees to the municipalities. He will also require the electricity company to pay overdue bills to the national electricity company.

Ghannam confirmed the invitation from the Minister of Finance to the CSTPBT to a dialogue and meeting in October.

* It’s worth mentioning the AMAN acts as the secretariat of the Civil Society Team for Public Budget Transparency.

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