Ramallah - The Coalition for Integrity and Accountability – AMAN held a session on Wednesday to discuss the report regarding "The reality of operational expenditures in the general budget and aspects of rationing therein.” The report provides a detailed analysis of the estimated and actual operating expenses for the period 2019-2023, as well as diagnosing the related challenges and difficulties faced by the centers of responsibility, and proposing the necessary solutions to achieve better results.
The session was initiated by the Executive Director of the AMAN Coalition, Issam Haj Hussein, who pointed out that the Palestinian Authority is going through a chronic, accrued and long-term financial crisis that requires surgical treatment, so it is not passed on into the future and burden future generations with huge debts. At the same time, he stressed that the Israeli occupation is primarily responsible for the successive financial crises, due to restrictions and piracy of clearance funds, emphasizing that any reform measures do not include a radical solution to major issues in the financial crisis, namely, net lending, unpaid salaries, security budget, medical transfers, about which he stated that, because of the occupation, we cannot completely overcome this crisis.
Haj Hussein touched on the President's approval of the budget for the fiscal year 2024, wishing that the government involved civil society in discussing it before passing it on to the President, in line with promises and directions it had declared on the need to involve civil society, especially in light of the challenges that our people are going through in general and the war of extermination on the Gaza Strip in particular.
He also pointed out that this report was a contribution by the civil society team to support transparency in the public budget, and is part of a series of reports prepared by the team that provide practical recommendations that could help in surmounting the financial crisis plaguing the Palestinian National Authority.
The reality of operational expenses
The report showed that the actual operating expenses during the period 2019-2023 increased by almost 32%, which contradicts the commitment to austerity measures and reform plans. The report also showed that most of the actual operating expenses exceeded the allocations of the General Budget Law for the fiscal years 2019-2023 for operational expenses (goods and services.) This is contrary to the General Budget Law for the year 2020, Article 9, item No. 2, where the following was stipulated, “It is not permissible to hold any expense or disburse any advance that does not have allocations in this Law by Decree, and it is not permissible to commit to any amount that exceeds the allocations allotted in this Law by Decree.”
Director General of the Budget: Operating expenses for the current year have been reduced by about 18%
For his part, the Director General of the Budget at the Palestinian Ministry of Finance, Mr. Tariq Mustafa, explained that the operating expenses in many institutions are limited, and in some ministries the operating expenses constitute most of their expenses, which depends on the type of services they provide. He pointed out that the health sector accounts for 48%, while the security sector accounts for 15% of the total operating expenses, and education accounts for 9%.
Regarding the possibility of curbing operational expenses, Mr. Mustafa explained that in 2024, operating expenses were reduced by 18% as compared to last year's budget, and that the Ministry of Finance has started a series of measures with ministries and institutions to implement austerity measures.
Mr. Mustafa also stressed that the Ministry of Finance has asked all ministries to review their operating expenses in several areas, including telecommunications lines, travel expenses, rents, etc. He explained that the Ministry of Finance has been working for nearly a year on the "Compliance Control" project, which has been applied and tested in 12 government institutions.
With regard to the medical referral system, and the enormous proportion it consumes from operational expenses, Mr. Mustafa explained that the Ministry of Health issues medical referrals to the citizen based on the data available to it and the decision of the committees in this regard. He also pointed out that work is underway with the Ministry of Health to control the transfers in order to keep them within the budget ceiling.
Top recommendations to reduce operational expenses
The report put forward several recommendations to decrease the operational expenses of all ministries and government institutions, in the short and medium term, which are:
- Commencing the application of the principle of accountability to public spending.
- Holding discussion and listening sessions to present the budgets of the various centers, especially those with relatively high standing, in light of the disruption of the Legislative Council.
- Evaluating of governmental or semi-governmental institutions funded by the Palestinian Authority who do not accomplish the desired objectives of their establishment.
- Implementing all required reductions within the possible limits for all items of operational expenditure, which requires commitment to an integrated plan for controlling expenses. Also, all items of expenditure that clearly have no return to society must be canceled or frozen, such as expenditures for fuel, communications, travel, operational expenses for external missions and operational expenses for embassies.
- Taking measures to ensure the commitment of the centers of responsibility to implement government decisions, particularly those requiring the reduction of job privileges such as allowances, raises and bonuses. This requires the abolition of the margin of exception or the like granted to the concerned minister.
- Requesting of the President to form a committee comprised of the Prime Minister, the Ministry of Finance, the Personnel Bureau and the National Fund to review the structures of embassies, the number of their employees, their operational expenses and the privileges granted to their employees.
- Separating the functions and authority for spending and endorsing financial transactions; namely, the authority to requisition and receive purchases and supplies, the function of holding assets and controlling their uses, the function of accounting for financial operations, and the function of control and auditing.
- Preparing and approving a system or manual of unified financial policies and procedures consistent with the law governing disbursement procedures as well as control and auditing by the competent departments.
- Providing qualified human resources and accounting systems required to audit and follow up on medical treatment bills in Israeli hospitals in a way that prevents manipulation of treatment costs, in addition to rationalizing spending.
- Immediate activation of internal and external control tools and procedures on the performance of the relevant departments in the medical referrals file.
- Reducing the telecommunications bill by eliminating the zero number service for fixed-line telephones in the offices of employees whose tasks do not place them in positions of responsibility.
- Adopting a special system for monitoring fuel expenditures for vehicles allocated to the civil and security sector.
Consensus on the need to limit expenditures
The report initiated a discussion among the attendees, who agreed on the importance of reducing operational expenses, as the current financial crisis is the deepest and most complex since the establishment of the Palestinian Authority; it is so multifaceted that it negatively affects the various components of Palestinian society, and limits the Authority's ability to fulfill its obligations.
Dr. Raslan Mohamed, an academic at Al-Quds Open University, stressed the importance of the PA dealing with the issue of expenditures in general, as Palestine is a state under occupation without resources and dependent on external foreign aid and grants.
Dr. Azmi Al-Shuaibi, advisor to the Board of Directors for combatting corruption at AMAN, attributed the causes of the deficit in the general budget, which is broadening year after year, to internal and external reasons. He stated that the internal cause can be remedied, but the external is the occupation, which has complete control over the resources and capabilities of the Palestinian people. In his appraisal of the internal factor, Al-Shuaibi stressed the need for the government to adhere to the idea of partnership with the people and their representatives, and the importance of having a legislative council to carry the majority of the burdens placed on the government today, including its obligation to decide all aspects of spending and control of expenditure.
