Following the publication of the draft General Budget Law 2025 on the Ministry of Justice's legislation platform, and the Ministry of Finance's presentation and discussion of the draft with representatives of a number of civil society organizations and the Civil Society Team to Enhance Budget Transparency, and the review of its reform directions, which the current government has adopted since taking office, including reviewing and amending organizational structures, merging and eliminating unnecessary institutions to reduce expenditures, working to amend the Civil Service Law, and adopting a job rotation policy, the Civil Society Team to Enhance Public Budget Transparency considers the following:
First, the Team appreciates the Ministry of Finance's new orientation and approach towards openness and participation, although it came three months late from the beginning of the year. However, it considers this step one of the basics necessary to reform the management of public funds and build trust between citizens and the government.
Secondly, the community discussion is not a substitute for discussion with the Legislative Council, nor is it a substitute for it. The continued dissolution of the Legislative Council and disregard for holding elections will exacerbate the issues in public finance management and hinder any attempts at radical and structural reform of the public budget.
Third, despite the importance of holding community consultations on the budget, according to Law No. 7 on the Organization of the Public Budget of 1998, "the Council of Ministers shall submit the draft budget law to the Legislative Council at least two months prior to the beginning of the fiscal year." Thus, presenting and discussing the draft in March, three months into the fiscal year, represents an unjustified violation of
the law.
Fourth, the stated intentions and some of the measures taken to reduce spending are important and necessary. However, so far, they have not succeeded in reducing expenditure. Accordingly, the Civil Society Team believes that the core issues that drain the public budget, such as the salaries and wages bill, the net lending file, and medical transfers, have not shown any results.
Fifth, the Team considers that the steps taken to address and reduce the net lending file are paramount. It also believes that the Net Lending Unit's diligent follow-up of financial settlements with local authorities, together with the continued follow-up and audit of the invoices submitted by the Israeli side, will contribute to controlling and reducing this item.
Sixth, the Team believes that public servants’ management still represents a chaotic issue due to the lack of accurate published figures that show differences in the numbers of employees. This situation requires the expedited adoption of a new civil service law to address these gaps and enforce social justice in salaries and wages, improve public servants’ living standards, and boost their performance. It is also recommended to adopt the Early Retirement Law to slim down the public service. The civil society team also believes that there is a need to integrate bonuses into the basic salary, in addition to amending the salary scale and addressing existing issues, to minimize existing gaps and ensure justice and equality in the allocation of these bonuses.
Seventh, the civil society team still has reservations about the mechanisms for reforming the health system. It believes that development expenditure must be increased, including on public health services to stop the bleeding of medical referrals. It is worth mentioning that only 56 million shekels were spent for developmental expenditures for the Ministry of Health in 2024, which constitutes only 28% of the budget allocated for developmental projects. Moreover, 130 million shekels were allocated this year as developmental expenditures to restore the goals of the health system reform.
In this context, the civil society team believes that the problems with the health insurance system persist, but reform proposals repeat the same unsuccessful pledges. Current efforts do not address the root causes of the challenges of the current health insurance system. Therefore, the Team recommends the adoption of a new more just, universal, and mandatory health insurance system.
Eighth, the Team believes that the government's financial obligations, amounting to approximately $12.9 billion, or approximately 45 billion shekels, pose a real threat to the government's performance and the funds it manages, such as the Pension Fund. Furthermore, the accumulation of arrears in the absence of mechanisms or payment plans threatens the government's ability to fulfill its obligations. Accordingly, the Team calls for the establishment of clear and impartial criteria to determine the mechanisms for the payment of arrears.
Ninth, the government’s obligations to the Palestinian Retirement Authority reached 11 billion shekels. In this respect, the Team believes that the financial relationship between the Pension Fund and the Ministry of Finance regarding these debts remains ambiguous. It also notes other issues related to the Pension Fund, including its failure to publish its financial reports for years. The Team reiterates that the accumulation of debts to the Pension Fund threatens the Fund’s survival and undermines its ability to pay retirement benefits to participants.
Tenth, the Team has reservations about the security sector's continued monopolization of the largest share of the general budget at 21%, especially in light of citizens’ sense of the role assigned to the security services and their ability to protect them under the current circumstances. The Team also believes that posting the security budget as a lump sum, without detailing the budgets allocated to each of the security agencies, misleads citizens and hinders the possibility of accountability. Accordingly, the Team calls for the publication of the budgets allocated to each agency in the security services, as well as the need to work on approving the administrative structures of the security services, taking into account the inflated staffing in the security sector, and organizing the hierarchical status of manpower to correct the inverted triangle.
Eleventh, the civil society team notes a lack of transparency in several budget items. Expenditure disbursement and beneficiaries are not clearly shown; this includes transfers to NGOs and other centers of responsibility.
The team believes that the expected budget deficit is the highest in recent years due to the increase in illegal Israeli deductions and the deterioration of the economic situation, which results in a decrease in revenues. Therefore, it is necessary to intensify international campaigns to pressure Israel to stop the deductions and return the stolen clearance funds. The government also needs to move forward towards reducing the essential expenditure that drains the public budget.
In conclusion, the Civil Society Team believes that the positive trends require decisive will and seriousness in implementing and enforcing them, especially since the State Audit and Administrative Control Bureau's review of the final account indicates reservations on the application of the budget, and other reservations indicating non-compliance and exceeding what is stated in the budget law, and the need to enhance openness and participation in all centers of responsibility and decision-making, without limiting it to some centers of responsibility only, calling for periodic meetings between the Ministry of Finance and the civil society team to follow up actual spending and performance of the 2025 General Budget, in order to review the periodic reports required by the Ministry to be issued by the Ministry of Finance. The Team also believes that taking feedback and recommendations is important to ensure participation, pointing to the recommendations and proposals it has made to improve public finance management, especially on key issues, and expressing its readiness to provide continuous support to achieve reform in public finance management.
