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Palestinian Authority: Finance

Volume 461: debated on Thursday 14 June 2007

To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment she has made of the revenue of the Palestinian National Authority for the financial year 2006-07; and if she will make a statement. (141659)

The Palestinian Authority is facing a severe fiscal crisis in 2006-07, mainly caused by a collapse in revenues. This fall has largely occurred as Israel has withheld the revenues, such as VAT receipts and customs payments, that it collects on behalf of the Palestinian Authority. These resources typically made up around a third of the Palestinian Authorities domestic revenues and have been withheld since March 2006. Precise figures for the amounts are not available but the International Monetary Fund recently estimated they may be in the order of US$750 million. Other sources of tax finance have also fallen as a consequence of the broader collapse in economic activity in the Occupied Palestinian Territories. External funding from donors (including to the Palestinian Authority and the Office of the President) has risen since 2005 but this has been insufficient to offset the reductions elsewhere. Overall revenues for 2006 are estimated at US$1.4 billion, down from almost US$2.2 billion in the previous year. The EU has provided more financial assistance (over €680 million) to the Palestinian people in 2006 than it did in previous years. During financial year 2006-07 the UK gave over £70 million to the Palestinian people, £30 million bilaterally and an additional £40 million through our EU contributions.