The Coalition for Accountability and Integrity (AMAN) held its Semi Annual Public Budget Conference on 25 October 2017 at City-Inn Hotel in Ramallah. In his opening speech, Mr. Abdel-Qader Al-Hussein, Chair of AMAN’s Board of Directors, called upon Palestinian government to intensify its efforts toward a more open and participatory approach in the administration of public funds by promoting the involvement of the civil society organizations, Civil Society Team and the media in the process. He reiterated the importance of this approach in fulfilling the national priorities on the National Policy Agenda 2017-2022, mainly as relates to fostering accountability and transparency.
Mr. Husseini also shed light on key issues relevant to management of public fund and public budget following government’s budget austerity and tightening of public expenditure, including on pay roll, and repayment of debts of the Pension Agency. He explained that the conference aimed to formulate recommendations for improved management of public funds, fostering citizens’ resilience, promoting social budget and boosting citizens’ right to access to information, to accountability and monitoring of public finance performance.
The Chair of the Board noted that the conference was part of a series of events that the Civil Society Team has been organizing for several years to promote transparency of public budget, preservation of public fund and combatting challenges hindering development.
The 2017 conference aims to present to the Palestinian government useful recommendations to redress the management of public funds and consider for the 2018 budget. To this avail, the Ministry of Finance was invited as main commentator on different sessions. Unfortunately, however, in spite broad representation of other government and civil society institutions, the Ministry of Finance was not represented.
CST member, Ms. Lamees Farraj, presented the semi-annual report of the public budget for 2017, focusing on a review and analysis of current practices. She shed light on the expenses that need to be cut. The report further discussed MoF’s compliance with regulatory framework, revealing gaps relevant to the deadlines prescribed in the Public Budget Law. Furthermore, findings showed lack of compliance with international transparency standards, which require public dissemination of budget.
Ms Farraj explained that presentation of the budget to the private sector and civil society organizations, including the Civil Society Team, was not fully participatory. She reiterated the need of engagement of civil society organizations in different budget preparation phases and in supply of public budget data and documents.
The general budget of the Palestinian National Authority suffers from chronic structural imbalance, as evidenced in the expenditure-revenue gap due to constant increase in expenditure and decline of donors’ aid to the public budget. Furthermore, the government’s austerity plans failed and led to imbalance distribution of expenses with salaries representing over 50% of the total budget. On the other hand, the security sector continues to receive the lion’s share – although with ambiguous areas of spending - whereas the developmental sector’s allocations are dropping.
To conclude, Ms. Farraj explained that the general budget structure remains item-based, whereby financial statements produced by the Ministry of Finance and Planning are itemized into salaries and wages, social assistance, use of goods and services, transfer expenditures, capital expenditures, developmental expenditures), which are presented in dummy numbers without and details or linkage to programs or goals achievement. This resulted in lack of accountability and transparency.
This CSTPBT session focused on the salary gaps in the public service. The session was chaired by CST member, Ms. Intisar Hamdan, who reiterated that public service was the most attractive for job-seekers. She also noted that in recent years, the government has been downsizing its sector. She added that AMAN-CST Secretariat had submitted recommendations relating to rationalization of public expenditure, mainly relevant to the salary bill. She mentioned that statistics showed that most civil servants (69%) aged between 30 and 49 years.
Economic expert, Dr. Nasser abdelkareem, reviewed the report highlighting the double fold problem of salaries: on the one hand, salaries usurp most of public expenditures; on the other hand, they are inequitably distributed with huge vertical gap between staff across the administrative hierarchy within the same sector (civil, security/ military). The gap also appears horizontally between civil servants and security employees compared to diplomatic missions and the judicial authority.
Dr. Nasser further explained that the gap is not limited to the salaries but extends to allowances and other benefits granted to employees of the civil and security sectors. This deepens the gap and lead in some cases to waste of public funds as some functions are unjustifiably oversized.
Mr. Abed Al-Kareem also pointed out the absence of policies that regulate job ranking or salaries maximal ceiling in non-ministerial public institutions. This malpractice exacerbated the public treasury as some heads of such agencies receive basic pay and allowances that bypass the pay of the President of the Palestinian National Authority, that is over 100,000 US Dollars a year.
CSTPBT report recommended to review and rescale salaries, as specified in relevant civil and military service laws and in the regulations applicable to diplomatic missions and the judiciary. The purpose of the review is to reduce the basic salaries gap and adjust the applicable rise and allowances across all institutions for similar job titles and grades. The report also recommended to consider raising the pay of lower civil and military staff when rescaling salaries to reduce the grade/rank pay gap.
Mr. Lutfi Samhan, Director General of the Directorate of Legal Affairs at the General Personnel Council, noted that the new draft civil service law submitted to the Ministerial Council for review prior to endorsement provides for bridging the gap in public service salaries and prescribes restructuring thereof. He called for rapid ratification of the law since it will help achieve equity in the public service sector. Samhan also explained that the new civil service law considers eligibility to the public service noting that the current law regards the academic qualification, which doubles the gap. He mentioned that jobs are under review to account for the tasks and mandates to reduce and further eliminate the gap in the future.
Mr. Musa Abu Zaid, Head of the General Personnel Council, delivered a speech in which he praised the efforts of the AMAN coalition and the issues it raises, especially over the public money, he also pointed out that during the past 4 years there has been a noticeable development in the salaries of the public service, through raises and changes in employment scale, therefore, Mr.Abu Zaid expected that the vital and important public sector will be the most important of which for job seekers. Moreover, he emphasized that the gap between salaries must be discussed in regards comparing it with salaries of employees of the private and civil sectors.
The third session was facilitated by Dr. Azmi Shuaibi, Consultant of AMAN’s Board of Directors, pointing out that the public sector is the main employer, in addition to the private sector, emphasizing the importance of financial rights of employees managed by the Palestinian Pension Agency, in the absence union body to defend the rights of employees. Moreover, Dr. Azmi discussed that the main foundation to sustainability of the fund is the continuous transfers from the government, and the continued payment of contributions by employees in addition to investments of the fund. He also pointed out that the session will highlight the amount of the accumulated governmental debts for the benefit of the fund and its payment policy, recommending that the government should regulate the payment of contributions to the fund and to set a full schedule of the debts accumulated in favour of the fund.
Mr. Jihad Harb, a Researcher, reviewed the government policy to pay the debts of the Pension and to face challenges over sustainability which has been prepared for the CSTPBT, emphasizing that there is clear danger regarding the Pensions sustainability, which led to the accumulation of debts on the public treasury sine 1994 till the end of 2016, in worth 5.6 billion shekels.
Such debts conclude most of the funds and assets of the Pension in an average of 88%, preventing them from being invested in favour of the Agency, causing a threat to the Pensions ability to pay further future pensions to employees who reach retirement age. Moreover, Mr Jihad, stated that despite the commitment of the Ministry of Finance and Planning to pay 240 Million shekels in 2016, the value of what should be paid in that year was about 1.3 Billion shekels, resulting in accumulation of debts and continuous threat over the Pensions sustainability. Moreover, the Ministry of Finance and Planning is paying Pension benefits directly to employees, reaching up to 843 Million Shekels (70 shekels per month) for the year 2016, considering that paying such amount is a part of repayment of debts over the public treasury, due to the failure of the Ministry to transfer all pension earnings to the Pension Agency.
Mr. Harb also stated that the” value of the Pension’s investment is estimated at 255 Million Dollars, which is a modest amount compared to the total debt accumulated by the Pension over the treasury estimated at 1.829 Billion Dollars, presenting only 12% of the total Pensions money, which is a low percentage that does not contribute in the sustainability of the Pension or in preserving the money of the employees. Therefore, Mr. Harb recommends there should be a governmental plan to address the issue of debt accumulated on the treasury for the benefit of the Pension Agency, in order to ensure the sustainability of the work of the Pension.
Mr. Adnan Abu Al-Hummus, Financial Advisor to the Palestinian Pension Agency, expressed his sorrow for the absence of the Ministry of Finance in the conference since it is the agency responsible for management of public funds. He also mentioned that they two key sources are subscriptions and government’s contributions but they are not available, which jeopardizes the Agency’s sustainability. He mentioned the accountability committee of the Ministry of Finance and Pension Agency stating that the problem lies in the interest on deferred payment, which currently amounts to 1.8 billion US Dollars. He also mentioned that the Pension Fund outsourced an auditing firm that has just completed auditing the financial statements of 2015.
Mr. Bader Amarna, Legal Advisor of the Pension Agency, commented on the report’s coverage of legal framework, pointing out that it omitted a number of key pieces of legislation that regulate the work of the Pension Agency. He also stated that the report was inaccurate in its reference to non-dissemination of the reports of the Board of Directors and that the Agency does not prohibit publication of its reports.
The audience referred in their comments to the Pension Fund’s governance and management, noting a conflict of interest in its board of directors, which mainly comprises government officials. They expressed their concern about possible collapse of this Fund and called for thorough solutions for improved accounting and loans rescheduling. They also demanded restructuring of the Fund and its Board of Directors.
CSTPBT was formed in 2010, with membership of civil society intuitions in the West Bank and the Gaza Strip, while AMAN Coalition serves as the its secretariat. The CSTPBT advocates for citizens’ access to the public budget information, and community involvement in the formulation of public policies. such practice will promote community participation in governance and enhance transparency, accountability and good governance in management of public funds and affairs.
