2021 Activity

Poor transparency and disclosure in public financial management in Gaza widens the gap between citizens and officials

Poor transparency and disclosure in public financial management in Gaza widens the gap between citizens and officials

In the absence of Gaza-based Ministry of Finance from the 2021 conference of the Civil Society Team for Enhancing Public Budget Transparency,

Poor transparency and disclosure in public financial management in Gaza widens the gap between citizens and officials

Gaza – The Civil Society Team for Enhancing Public Budget Transparency (“Team”) held its annual conference on the public budget, Transparency in Public Financial Management in the Gaza Strip, 2021. The conference was organised in the shadow of the ongoing Israeli siege, recurrent aggressions, and persistent internal Palestinian political divide. This situation gives rise to confusion in public budget management and fiscal planning, including annual revenues and expenditures. Political rivalries also compromise the ability to control public financial management (PFM) performance.

Comprising two sessions, the conference presented the Team’s position towards PFM performance of the Government Follow-up Committee (GFC) in Gaza. In addition to an analysis of expenditure management performance of the Ministry of Finance (MoF), an analytical presentation outlined compliance with the values of integrity, principles of transparency, and systems of accountability in management of the Gaza reconstruction, Zakat funds, and humanitarian assistance by relevant parties. The budget proposal is prepared accordingly. The MoF is mandated to execute the budget for the benefit of citizens – taxpayers – in the first place.

The Team does not substitute the Palestinian Legislative Council, but its role complements and supports a participatory approach

The conference began with a keynote address by Dr. Kamal al-Sharafi, Deputy Board Chair of the Coalition for Accountability and Integrity (AMAN). Al-Sharafi highlighted the challenges faced by the Team members and civil society organisations (CSOs) amid declining PFM transparency and accountability systems and mechanisms in Gaza. These are impeded by a policy against publication, denial of access to information, and inadequate engagement of CSOs in prioritising fiscal planning and budgeting processes. 

Al-Sharafi stressed the importance of promoting community engagement and accountability, right of public access to information, and participation in government policy making. He called on the Gaza-based Palestinian Legislative Council (PLC), Change and Reform Bloc, GFC, and government bodies to scale up efforts to adopt a participatory approach and be more open to CSOs and the Team. Media outlets will be engaged in the PMF process to achieve public priorities. Al-Sharafi expressed regret that the MoF was absent from the conference. This would raise questions about government agencies’ serious willingness and belief in the principle and right of community engagement.

Al-Sharaft emphasised that the Team would not replace the inactive PLC’s role in oversight and accountability. However, the Team plays a significant role in laying the foundations for democracy with a view to promoting a participatory approach and integration process.

Gaza-based MoF and GFC are largely sealed off from CSOs

In the first conference session, Mr. Wael Ba’alousha, AMAN Gaza Office Director, presented a research paper, entitled Transparency of Public Financial Management in the Gaza Strip. The paper provided an overall review and analysis of the current PFM context in Gaza.

Ba’alousha found out that the MoF adopted a policy of inadequate disclosure of revenue and expenditure data, information, and statements in Gaza. Furthermore, the Ministry is closed off to researchers and CSOs in particular. It has not made publicly available any fiscal plans or reports on the public budget. The PLC Change and Reform Bloc has not engaged in an open debate of the budget or fiscal plan of the governing authority in Gaza.

Noncompliance with statutory deadlines for budget submission has confounded fiscal plans of line ministries and other government bodies

Ba’alousha explained that the governing authority and MoF in Gaza did not abide by the statutory deadlines set by the Palestinian Basic Law and Law No. 7 of 1998 on Regulation of the Public Budget and Financial Affairs. Since late 2014 (then under the National Consensus Government), the MoF has not put in place a public budget proposal (or an alternative fiscal plan). Ever since, the process has been managed by the GFC. Although the PLC Change and Reform Blocs has continued to be in session, fiscal plans for revenues and expenditures have not been approved on a timely basis, clearly violating the law and undermining the plans of line ministries and non-ministerial government bodies.

MoF has not delivered on its promises to engage the Team in the budgeting process and provide information on revenues and expenditures

In early 2019, the MoF made a pledge to AMAN to provide the 2018 financial reports and 2019 fiscal plan. The Ministry also promised to engage the Team in preparatory meetings of ministerial budgeting process. The MoF did not fulfil these promises, however. This restricts CSOs’ ability to provide community accountability for PFM and contribute to prioritising expenditures.

The Gaza-based PLC approved the 2021 public budget proposal of the “Gaza government”, with public expenditure totalling US$ 3.263 billion and revenues estimated at NIS 1.473 billion. The budget deficit amounted NIS 1.790 billion. The budget targets public sector staff salaries and wages, operating expenses (ministries, utilities, travel missions, and post), transfer expenses (pensions and social care), capital expenses (purchase of new assets), and development expenses (implementation of development projects).

In collections, a lack of transparency manifests in the failure to publish any figures or statistics of the amounts collected and paid. The MoF website includes no mention of the public budget or collected fees and taxes. Posts on social media platforms and other webpages only provide brief news on meetings, hearing sessions, or announcements of budget approval, leaving out any supporting details or documented reports.

According to the research paper, for many years, the Gaza government has functioned independently, viewing the budget as an internal affair that does not accommodate mechanisms of engagement, disclosure, or public availability. Hence, the Team recommended that the principles of disclosure and flow of information on the budget and fiscal plan be adopted by the Gaza government for both past and present years. A clear policy will be embraced by the MoF to disclose the budget and amount of collected and paid revenues.

The Team: Disclosure, public availability, partnership, and powerful oversight tools are key PFM demands

The Team stressed the importance that it be engaged in budgeting and fiscal planning processes, starting with planning, through approval, and ending with control over execution. Also, mechanisms for control, accountability, and budget reporting will be disclosed. Quarterly, midyear, and end of year reports of the Gaza-based MoF will be made publicly available.

The Team called for promoting PFM accountability tools, particularly of the GFC and PLC Change and Reform Bloc, in Gaza. The latter is authorised to carry out accountability. Within the framework of community accountability, these agencies need to respond to CSOs’ efforts to take part in hearing sessions, accept participatory budgeting, including collection and spending, and admit other community accountability tools. The Team also recommended that PFM efficiency be regularly investigated by means of studies, reports, and research papers with a view to immunising the environment of PFM integrity, transparency, and accountability in Gaza.

The MoF needs to approve a programme-based budget and publish relevant fiscal plans

Ms. Marwa Abu Odeh, the Team Coordinator in Gaza, provided an overview of an analytical paper on fiscal statements in Gaza. Since 2015, the Gaza-based MoF has been putting together a fiscal plan, rather than a budget. Recognising the National Consensus Government, the Gaza government then in power resigned. The paper recommends that a programme-based budget be approved given that it supports development programmes. Meantime, the GFC and MoF will be committed to publish the public budget, or so-called fiscal plan.

The MoF has not released any of the eight documents to maintain the principles of budget transparency

In Gaza, the MoF has not published any of the eight key documents in line with constitutional norms and international principles to ensure public budget transparency. This reflects poor compliance with applicable international standards. These budget documents include the budget circular, detailed budget, and approved budget line items after all are endorsed by the PLC Change and Reform Bloc. The MoF should also make publicly available the citizens budget, detailed financial report of the first half of 2021, periodic and quarterly reports, and final account.

In Gaza, some responsibility centres account for the largest portion of the 2021 public budget

According to the analysis, domestic revenues and fiscal policy for sustaining and increasing revenues will be disclosed, so will fiscal policies, including a definition of the objects of expenditure, amounts, distribution and spending of donations and grants to responsibility centres. The paper indicates that the security sector, , Ministry of Interior, General Personnel Bureau, State Audit and Administrative Control Bureau (SAACB), PLC, Public Prosecution, Judicial Authority, Ministry of Justice, and General Secretariat of the Council of Ministers take up as much as 38.7 percent of the public budget. By contrast, the social development sector, including the Ministry of Health, Ministry of Education, Ministry of Women’s Affairs, Ministry of Labour, Higher Council for Youth and sport, and Ministry of Culture, accounts for 42 percent of the budget. While the economic development sector represents 2.24 percent, budget allocations to the infrastructure sector stand at 1.66 percent.

Gaza-based PLC Budget Committee stands ready for community accountability

Commenting on both papers, Dr. Yihya Mousa, Head of the PLC Economy and Budget Committee, said that the Gaza population did not have their fair share of the Palestinian Authority (PA) public budget. Instead of US$ 180 million, some US$ 40-50 million were spent. On a monthly basis, nearly US$ 110 million were deducted from Gaza’s share.

Mousa elaborated that the Gaza government submitted budget proposals between 2009 and 2014. Then, budget submission was suspended for political reasons. Gaza was committed to discuss and submit the final account to the SAACB, but follow up meetings have not been held.

Mousa denied the percentage of spending on salaries and wages, stating that it accounted for 64 percent of the budget. Operating expenses took up 13 percent, transfer expenses 21 percent, and capital expenses 2 percent.

Indicating that the GFC provides access to all requested information for researchers and media representatives, Mousa explained that the Committee stood ready for community accountability. However, this would exclude certain reports, which could cause “some damage.” According to Mousa, the SAACB published eight reports relating to the MoF. In compliance with best practice, the GFC regularly meets with and takes seriously the recommendations of competent parties with a view to improve operations.

Inadequate information on stages of the Gaza reconstruction process

The conference second session focused on funds management (Gaza reconstruction, Zakat money, and financial assistance) in Gaza. Researcher Nahedh Ubeid provided a review of the environment of integrity, transparency, and accountability in the Gaza reconstruction process, particularly in the aftermath of the most recent Israeli aggression on Gaza. The review demonstrated that this environment improved thanks to the post-2014 war experience. However, it continues to be clearly weak in several aspects. For example, disclosure mechanisms are flawed by a lack of easy access to information by the wider public and stakeholders. While a code of professional conduct does not govern the Gaza reconstruction process, concepts and tools of community accountability are almost completely absent. Integrity, transparency, and accountability are also seriously weakened by the lack of a common system for internal and external oversight mechanisms.

The research paper concludes that formal oversight of the Gaza reconstruction process should be strengthened. Expedited action will be taken to reach a reconciliation between parties to the Palestinian political divide. A recognised national consensus government will be formed in order to mobilise funding and accelerate the Gaza reconstruction effort. The paper recommends that serious action be taken to compile a code of professional conduct for personnel involved in the reconstruction process to ensure an improved environment of integrity and transparency. Internal and external oversight mechanisms will be invigorated and consolidated into a common system, ensuring more transparency and integrity in Gaza reconstruction operations.

On community accountability for Gaza reconstruction, in addition to formal oversight, CSOs will be empowered to play a role in holding stakeholders and officials to account. This role needs to be admitted and necessary information will be made available, accordingly.

Ministry of Public Works and Housing: US$ 3.8 billion is needed for Gaza reconstruction

Mr. Naji Sarhan, Undersecretary of the Ministry of Public Works and Housing (MoPWH), commented that data from the MoPWH was available to everyone. The Ministry has released all statistics and damage assessment methods on its website. In compliance with the policy of privacy, the MoPWH does not post information on affected beneficiaries. According to Sarhan, direct damage was assessed separately from indirect losses. This task was delivered by relevant committees immediately after the war had come to an end. To avoid duplicity, the MoPWH shared information with the United Nations Development Programme (UNDP) and United Nations Works and Relief Agency (UNRWA). According to MoPWH initial statistics, damage incurred amounted to US$ 479 million. Following an audit, the Ministry announced that damage stood at US$ 416.5 million. Sarhan indicated that committees received and processed citizens’ complaints.

After the 2014 war, donors pledged some US$ 5 billion in support of Gaza, including US$ 3.5 billion earmarked to Gaza reconstruction and US$ 1.5 billion to the PA. However, only 24 percent, or US$ 800 million, of this amount was delivered. Totalling US$ 600 million, previous damage has built up further since 2014. “We need an allocation of US$ 3.8 billion to cover losses, damage, and development projects to be implemented in order to restore to original condition,” Sarhan stated.

On disclosure of grants, Sarhan made clear that donors appropriate grants to implementing particular action plans. The MoPWH regulates the Gaza reconstruction process, but does not directly receive funds. These are transferred to beneficiaries’ accounts.

Need to develop and approve a national plan to achieve Zakat objectives and publish beneficiary selection criteria to avoid corruption and duplicity

Dr. Sami Abu Shammaleh, a researcher, presented a research paper, entitled The Environment of Integrity in the Zakat Management Operations. In this context, these functions are challenged by multiple sources of Zakat collection, inadequate coordination, limited transparency in Zakat money distribution, and poor guarantees to maintain equitable distribution of both in-kind and emergency aid. Also, Zakat management operations are impeded by ineffective oversight and accountability, undermining the rights of and denying justice and equity to needy citizens.

The research paper came up with a set of concrete recommendations. Most notably, a national plan will be developed and approved to achieve Zakat objectives. To prevent duplicity, central Zakat committees will be established throughout governorates. In addition to criteria for selecting beneficiaries, a code of professional conduct for Zakat personnel will be in place, providing for the submission of financial declarations. Websites of Zakat management institutions will feature enhanced transparency, ensuring public access to information, criteria, and conditions for application. Importantly, CSOs will be allowed an opportunity to monitor and follow up on this file.

Zakat and relief committees at the Ministry of Waqf and Religious Affairs: A database will be out in early 2022

Mr. Usamah Saleem, Director General of Zakat and Relief at the Ministry of Waqf and Religious Affairs (MoWRA), commented that a database, including 150,000 households, has been in operation since 2013. To be launched in early 2022, a new database will be shared with all relevant institutions. Since the beginning of 2021, a financial and administrative regulation for Zakat committees has been in place. Paying attention to oversight, the MoWRA established an oversight committee to assess the functions and performance of Zakat committees, which now report to the MoWRA Undersecretary. Between 2014 and 2021, the Directorate General of Zakat delivered 400,000 items of assistance. Together with the Zakat committees, it also disbursed US$ 10-11 million. According to Saleem, Zakat committees are governed by a regulation, which ensures their financial and juridical independence. Technically and financially, these committees report to the Zakat Directorate General. As such, each committee is able to collect and disburse funds in accordance with the eight legally specified purposes of Zakat. Saleem explained that some members of Zakat committees were employed at the Income Tax Department due to the fact that a legal provision to the contrary is not provided. He also stated reasons for the process of nominating, rather than electing, committee members.

Towards a better investment of the Ministry of Social Development’s Guidance Manual of Emergency Humanitarian Assistance 

Researcher Abdullah Sharsharah presented a research paper, entitled The Governance of Humanitarian Assistance in the Aftermath of the May 2021 Aggression. According to Sharsharah, multiple bodies deliver humanitarian assistance, most notably the government, United Nations agencies, CSOs, private sector, and individual initiatives. However, a binding public policy is not provided to determine a mode for inclusive coordination of institutional efforts. A unified national register for humanitarian cases is lacking because there is not precise and approved database to help decision makers to provide timely accurate response, ensure optimum use of resources, and prevent duplicate assistance delivery. Sharsharah called for a better investment of the Guidance Manual of Emergency Humanitarian Assistance, which was developed by the Ministry of Social Development (MoSD) earlier. 

Creating a national register and computerising databases to reduce opportunities for corruption in beneficiary selection

The research paper by Sharsharah calls on the governing authority in Gaza to approve corruption risk indicators in humanitarian assistance distribution by obliging both officials and staff to respect the values of integrity, comply with the procedures and principles of transparency, and promote the system of internal and external accountability. Humanitarian aid agencies, including the government, charitable associations, and private sector, are required to engage citizens in humanitarian assistance planning and needs assessment. This should identify real needs and ensure that a waste of public funds is prevented. While databases of beneficiaries are computerised, a national register of humanitarian cases will be created. A unified database will be rolled out to all humanitarian agencies. Interference with the selection of beneficiary groups will be absolutely minimised.

In his comment, Dr. Riyadh al-Bittar, MoSD Director General of Planning and International Cooperation, stated that the Ministry disclosed and posted all relevant reports on its webpage. While efforts are being made to create a national register, a unified database and computerised programme have been operational, providing access to information for 250 institutions. Al-Bittar also noted that the MoSD has in place an electronic complaint handling system, by which it received 95 percent of complaints. This is an indication that the public are well aware of this system. By contrast, the MoSD received 5 percent of complaints in paper.

Worth of note is that the first Conference on Public Financial Management Transparency was held in 2015 in Gaza. The Team will continue to provide needed follow up with all stakeholders with a view to maintaining the greatest degree possible of PFM transparency.

 

To watch the conference sessions, please visit:

https://www.facebook.com/AmanCoalition/videos/433448665066376

To download conference papers, please visit: https://www.aman-palestine.org/public-budget-gaza21