Ghassan Khabib: Ultimate Crippling, A Palestinian View!

The Palestinian Authority has been plagued this year by various financial troubles that are affecting, in turn, its ability to fulfill some of its financial obligations. The most recent source of these problems has been a decline in PA revenues. The Palestinian budget is usually composed of two sources of income: One is external funding, $1.83 billion annually, from donors, and the other is made up of domestic revenues, direct $812 million a year, and indirect, $1.442 billion annually, collected by Israel. Systematically reducing the need for external funding, that funding, remains a substantial part of the budget deficit financed by foreign aid from $1.8 billion in 2oo8, to $1 billion this year. Yet, some donors, for reasons that the Palestinian Authority does not know, have fulfilled commitments made in donor conferences or in Arab League meetings. That decline in external funding began a few months before the beginning of this year, and has continued to accumulate throughout 2011. It was dealt with by borrowing from banks, to the extent that the Palestinian Authority has reached the debt limit allowed by domestic laws and regulations. In the second half of this year, a new source of financial difficulty started to emerge.
Israel collects indirect taxes taxes on commodities imported and exported by virtue of Israel's control over the borders.