chapter
12 Pages

Fiscal challenges for a new Palestinian state

Fiscal reforms and the 2003 budget An attempt was made to deal with some of these weaknesses in the Economic Policy Framework which was introduced in June 2000 in response to growing dissatisfaction among donors. The diversion of revenues was largely ended, but public sector wage employment, which was still only imperfectly controlled by the MoF, continued to rise. There was a sharp squeeze on non-wage spending but a continued, albeit slower, rise in the wage bill: this was largely the result of a conscious decision by the PA to offset, in the way and to the extent that it could, the economic depression associated with the Israeli closures.