Following a discussion session on the reality of private sector arrears, their magnitude and transparency in their repayment measures,
The AMAN Coalition warns against the accumulation of debts and calls for comprehensive financial reform and institutional restructuring
Ramallah – The Coalition for Integrity and Accountability (AMAN) held a discussion session on a draft report titled "The Reality of Private Sector Arrears, Their Size, and Transparency in Payment Standards," as part of its contribution to promoting the principles of integrity and transparency in the management of public finances and affairs.
The participants in the session were representatives from the General Secretariat of the Council of Ministers, the General Administration of Complaints, the Ministries of Public Works and Health, as well as the Contractors Union, the Pharmaceutical Suppliers Union, the Water Authority, the Palestinian Monetary Authority, the Higher Council for Public Procurement, the Hospitals Union, and the Palestinian Central Bureau of Statistics, in addition to several civil society organizations.
The session was started by Lamis Farraj, who is the coordinator of the Civil Society Team for Supporting Transparency in the General Budget. She explained that the report aims to understand the internal issues that have worsened the debt crisis in the State of Palestine, look at how this debt has changed over time, and connect it to key factors like GDP, revenues, and public debt service. Additionally, it aims to present proposals that could stop the hemorrhaging of funds resulting from institutional inadequate performance and seek to address the mistakes that were made that contributed to the current unfavorable situation.
A financial situation more difficult than during the period of division
Researcher Youssef Al-Zummar reviewed the report, explaining that the current financial situation of the Palestinian Authority is more complex and difficult than it was after the Palestinian split in 2007, as the public debt has increased from about 3.5 billion dollars at that time to nearly 11.5 billion dollars today, which is almost three times higher, amid a decline in external support over the years.
Growing financial deficit
According to the figures for the first three months of 2025 presented by the Ministry of Finance, the total expenditures with net lending amount to approximately 4,500 million dollars annually. After excluding the fuel subsidy of 262 million dollars, the figure stabilizes at 4,238 million dollars. In contrast, with the ideal revenues of 1,400 million dollars and assumed support of around 1,300 million dollars, the total revenues will not exceed 2,700 million dollars, which means a deficit exceeding 1,500 million dollars, without paying any arrears or obligations to the unions.
Inflation of the workforce
The report confirmed that the payroll and the bloated workforce constitute the central dilemma facing the authority, in that the average attendance of military personnel is three days out of five, reflecting a 40% excess over the need, while the average attendance of civil ministry employees is four days out of five without affecting services, revealing a 20% excess over the need. It also indicated that the cost of military salaries amounts to 260 million shekels monthly, while the cost of civilian salaries is around 510 million shekels, which means it is possible to save approximately 150 million shekels monthly in the salary budget alone if a gradual and calculated plan is implemented to reduce the excess number of employees.
A gradual reform plan
The report emphasized the necessity for the Palestinian National Authority to adopt a financial reform plan over several years, which includes halting all forms of hiring and replacing it with the transfer of employees between institutions to meet needs, in addition to canceling the decision to prohibit transfers between the civilian and military cadres. It also called for discontinuing the policy of solutions for the unemployed by employing them in government apparatuses, but instead, focus on creating job opportunities in the private sector.
The pension fund crisis
As for the pension fund's debt, the report warned of the absence of any prospect for addressing the billions owed to the fund, which makes it in danger of bankruptcy. A proposed amendment to the pension law was suggested in the report, which recommends limiting the fund's obligation to retirees under the civil service law to a minimum requirement of 15 years of actual service. Employees under other categories, such as military personnel, diplomats, and ministers, would remain in the charge of the Ministry of Finance until alternative solutions are found.
Reducing expenses and increasing revenues
The report also states that addressing the crisis requires reducing the expenses of the Interior and National Security, which amount to about 1 billion annually, a figure that the treasury cannot bear. It also called for exploring alternatives to the expenses of the Ministry of Education by seriously considering transferring compulsory education to local authorities, non-profit institutions, and the private sector, while abandoning government university education and maintaining only the supervisory and regulatory role.
Multiple comments
For his part, Kamel Al-Rimawi, the Assistant Undersecretary for Complaints at the General Secretariat of the Council of Ministers, confirmed that the current crisis has more political dimensions than financial ones, explaining that the occupation seeks to push the Palestinian Authority toward collapse by suffocating various backbones and cores of the Palestinian state and constriction every aspect of to its work. Al-Rimawi described the situation as seriously intense, bordering on catastrophic, and emphasized that the solution requires everyone's solidarity and collective effort to confront these challenges.
In his intervention, Ahmad Darawsha from the Ministry of Public Works explained that the ministry exclusively deals with classified, registered, and qualified companies according to project requirements, emphasizing that the Public Procurement Law mandates the determination of a project cost and sets a maximum ceiling of no more than 10%, but it does not specify a minimum for the estimated cost. He pointed out that bids submitted at abnormally low prices are handled by a specialized committee that demands additional requirements to ensure the possibility of execution, and if the conditions are not met, those bids are excluded. He added that addressing some issues related to adjustment mechanisms remains a responsibility that falls more heavily on the shoulders of the Contractors Union.
There is a need for surgical operations to prevent a complete collapse
Ahmed Al-Qadi, the head of the Contractors Union, confirmed that the government bears direct responsibility toward the people and managing their affairs, as well as toward the private sector, which cannot be left alone to bear the burdens of the financial crisis. He called for joint efforts to diagnose the financial reality and implement radical solutions and "surgical operations" that restore balance and prevent the ongoing collapse.
Al-Qadi explained that the government's reliance on borrowing from banks has directly impacted the private sector, which has become a "mandatory financier" for the government. He noted that the government's treatment of contractors as "interest-free banks" constitutes a waste of public funds, as delayed payments are equal to interest rates that can reach 40% or even 100% in some cases. Al-Qadi also pointed out a significant gap in the prices of funded projects, as the price of one ton of asphalt in projects funded by donors is 45 shekels, while in projects funded by the Ministry of Finance the cost of asphalt reaches 105 shekels, which he considered a clear waste of public funds.
Failure to make payments within the contractual periods creates an environment for corruption
Al-Qadi also emphasized that the government's delay in paying dues within the contractual periods creates an entry point for corruption, whether through bribery, fraud, or the absence of integrity and governance in procurement management. He pointed out that some entities exempted from the public procurement law engage in purchasing operations that do not adhere to proper standards.
Al-Qadi explained that the construction sector constitutes about 12% of the GDP and employs 25% of the workforce and is linked to more than 160 sub-sectors, which means that any disruption in the payment of dues does not only harm the contractors but also negatively impacts the entire national economy.
Reforming the healthcare system is an urgent national necessity; adopting comprehensive and mandatory health insurance for everyone
Mohannad Habash, the executive director of the Pharmaceutical Suppliers Union, explained that the largest debts in the private sector are concentrated in hospitals and the government health sector, as companies primarily rely on supplying the government more than the private sector, which has led them into recurring financial crises due to the accumulation of debts and delayed payments. Habash pointed out that the agreement with the government in 2023 stipulated fixing the debt at 750 million shekels, but the figure has now risen to about 1.1 billion shekels. He added that the interest and bank fees owed by the suppliers collectively could reach about 60 million shekels annually.
Habash also explained that the prices of pharmaceutical companies are subject to annual pricing guidelines that set a specific profit margin for each category, based on import costs, prices in neighboring countries, and the country of origin. He pointed out that the companies that participate in government tenders are limited to profit ceilings imposed by the government, which should not exceed 80% of the price approved for the private sector. Habash indicated that the government's delay in payments has led to supply chain disruptions, which the Ministry of Health itself has acknowledged. Statistics show that there are more than 500 types of medicines and medical supplies in shortage, including 13 items that have recorded a "zero balance" in the warehouses.
Habash emphasized that the crisis is not only because of delayed payments but is also a result of a malfunction in the healthcare system and its governing regulations. This failure necessitates reforming the healthcare system, conducting a comprehensive review, and developing the systems and laws. That includes the health insurance file and the necessity of making it comprehensive and equitable so that all citizens are insured by the government fairly, to alleviate the pressure on the Ministry of Health and ensure the sustainability of health coverage.
The Procurement Council is working on a transparent and stable mechanism for disbursing dues
The Procurement Council is working on a transparent and stable mechanism for disbursing dues
Mouayed Odeh from the Public Procurement Council clarified that the committee has the discretion to handle bids submitted at a cost lower than the estimated cost, as it can request contracts or documents proving the contractor's ability to provide the necessary materials and execute the project efficiently. He confirmed that the council possesses statistics proving that the problem lies not in the law, but in the mechanisms of implementation and the delay in paying contractors' dues.
Odeh emphasized that contractors are the only party bearing the financing costs resulting from the delay in disbursing dues, which raises prices in tenders in advance of their execution. He added that this applies to the pharmaceutical sector, where the cost of financing is included in the final prices. He confirmed that the Purchasing Council is working on establishing a transparent and stable mechanism for paying dues to both contractors and pharmaceutical suppliers, in addition to having mechanisms for reviewing disputes. Odeh also pointed out that the volume of government purchases does not exceed one billion shekels annually, of which about 300 million shekels are for purchasing medicines, noting that spending control measures have been fully exhausted.
The crisis of private hospitals and government obligations
Dr. Adwan Barghouti, vice president of the Private Hospitals Union and chairman of the board of directors of Al-Ri’aya Hospital (Arab Care), stated that the current figures circulating regarding debts and dues are not just financial data but a direct result of incorrect or poorly implemented political policies and decisions. He emphasized that the absence of the legislative council deprives the people of an official oversight body, opening the door to declared and undeclared financial waste without accountability or responsibility.
Barghouti pointed out that private hospitals bear heavy financial burdens amounting to between two billion and two and a half billion shekels, as some hospitals are no longer able to pay the salaries of hundreds of employees. He emphasized that the government's signing of any agreement with the private sector means a full commitment to its implementation, urging the government to honor its commitments and not to use difficult circumstances as an excuse to evade its responsibility.
Barghouti added that the unjustified spending in some institutions, particularly in the diplomatic corps, which consumes large budgets without effective oversight, is part of the misguided policies that have exacerbated the crisis.
Restructuring institutions and reducing waste
Dr. Azmi Al-Shuaibi, advisor to the Board of Directors of the AMAN Coalition for Anti-Corruption Affairs, clarified that part of the previous government's policies and mistakes caused the accumulation of financial waste. He emphasized the importance of eliminating those faulty policies before adopting any new ones. He also stressed that the reform should include revenues and expenditures, ensuring a fair distribution of burdens among different entities, taking into account the general economic conditions of the country, and not placing the burden of poorly thought-out policies on citizens or employees.
He pointed out a significant imbalance in the administrative structure of security institutions and ministries and emphasized the need to effectively restructure all institutions, halt unjustified appointments, and monitor government resources and assets to reduce financial waste. He explained that these recommendations also aim to improve public services for citizens and ensure the continual provision of those services in a more effective and transparent manner.
