Demanding a participatory approach with citizens and civil society groups,
Civil Society Team for Enhancing Public Budget Transparency calls Ministry of Finance for a hearing session to discuss public budget issues
Ramallah – The Civil Society Team for Enhancing Public Budget Transparency (“Team”) called the Ministry of Finance (MoF) to hold a public hearing session to discuss the interventions and mechanisms to be adopted for implementing the Reform Agenda. The Team called for discussing the public budget for the fiscal year 2022, with a particular focus on budget allocations to the social protection sector. Three months into 2022, President Mahmoud Abbas approved the Law by Decree on the Public Budget for the Fiscal Year 2022. An abridged version of the budget was made publicly available. Without any clarifications of spending on responsibility centres, the budget was published in complete disregard of engaging representatives of citizens and civil society groups. Taking no notice of taxpayers who fund over 85 percent of the budget, the budget proposal turned a deaf ear the Team’s constant demands for its involvement in deliberating and setting budget priorities.
The Team: The Reform Agenda should be published in full
In a position paper on the Law by Decree on the 2022 Public Budget, the Team stressed that the government should publish the Reform Agenda presented at the Ad Hoc Liaison Committee (AHLC). The agenda will be supported by the expected timeframe, responsibility centre, and body in charge of supervising implementation of the agenda. Periodic reports will be published on progress made in the implementation of the agenda. The full version of the Budget Law will be made available to the public, including a detailed account of allocations to responsibility centres. Budget approval will need to comply with the timelines set by the Palestinian Basic Law and Law on the Regulation of the Budget and Financial Affairs No. 7 of 1998. The government will no longer rely on the state of exception to continue spending in case the budget law is not timely approved in December before the end of the year.
In its call, the Team also stressed that the government and MoF should be open and embrace a participatory approach to engaging citizens and civil society actors in setting public budget priorities, particularly expenditure priorities and collection policies. Development expenditure and sources of finance will be transparent. Closed-door policies and information blackout will only contribute to the further erosion of public trust and confidence in government performance in general, and good public financial management by the MoF in specific.
Announced reform processes are still unclear
The MoF statement on the 2002 public budget made reference to substantial expenditure reforms in the public wage bill, health system, and net lending. The Team is of the view that these reforms are in line with the Team’s recommendations for spending control. However, implementation mechanisms are still not clearly defined. The figures of expenditures, revenues, and net lending projections do not reflect any intentions of the announced reforms.
The Team: The tax system needs to be reviewed for better social justice
The Team appreciates the government’s approach to subsidising commodity and energy prices and tax exemptions to the extent possible. It also commends the approach to growing revenues through a horizontal expansion of the tax base and reducing tax evasion by increasing compliance and commitment, while at the same time focusing on social justice and principles of incentivisation. However, the Team highlights the need to review and regularise the tax system through incremental taxes with a view to realising social justice.
Lacking criteria for emergency spending and special nature of spending
The Team is of the opinion that some articles vest the Minister of Finance and/or Prime Minister with broad powers for expenditure decision making, without making clear the criteria for emergency spending or special nature of spending. These do not emphasise that the Palestinian Legislative Council, the competent law making authority, is competent of making decisions on making transfers between budget line items and expenditure appropriations.
The President’s Office is excluded from enforcement of the financial regulation on State institutions
The Team made reservations to the exclusion of the President’s Office from the enforcement of the financial regulation on State institutions. Article 17(2) provides that “[i]n the execution of their budgets, all responsibility centres shall comply with the provisions of the Financial Regulation, taking into consideration the financial and accounting system of the President’s Office.” Of particular note, this Financial Regulation is not in public domain.
A law on universal and mandatory health insurance needs to be approved
The Team also had reservations on the health system reforms, which did not regularise the health insurance scheme by approving a law on universal and mandatory health insurance. According to the Team, the health system reform starts with approving a law on universal and mandatory health insurance, which brings about justice in access to the right to health as well as in contributions to the health insurance fund revenues and improvement of governmental health services. Should the current health insurance system remain as it is, any reform attempts will not contribute to a way out of this dilemma.
The Team: Spending should be prioritised in accordance with the public interest and protection of allocations to the poor and vulnerable groups
Based on a prudent balance between spending and available resources, the Team stressed the importance of publishing, making clear, and determining spending priorities in tandem with the public interest. Attention should be paid to optimal expenditure rationalisation, building leases, reduction of benefits to senior personnel, etc. Meanwhile, a plan will be devised for disaster and emergency management. Spending criteria and mechanisms will be set out, ensuring a regulation of contingency spending.
The Team emphasised the need to adhere to the provisions of the Budget Law, particularly in relation to development spending from the Public Treasury. The Team highlighted the government and MoF’s commitment to transparency and spending on the social protection sector, including protection of and transfer of all due payments to the poor.