As foreign aid plummets, Palestinian Authority faces financial crisis

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RAMALLAH — For the first time in years, the Palestinian Authority
faces significant economic unrest.

Opposition elements have been organizing protests against the PA amid
its latest budget crisis. The protests have urged the PA to cancel plans for
austerity measures, including a tax hike.

Palestinian demonstrators bang on pots as they march in the West Bank city of Nablus to protest against the government's recently announced economic austerity measures. /AFP

“We want a government that defends the people rather than robbing them of their food and money by raising taxes,” Khaled Mansour, a leader of the Palestinian People’s Party, said.

On Jan. 21, about 200 Palestinians marched through the northern West Bank city of Nablus to protest PA policy. The protesters called on PA Prime Minister Salam Fayad to resign in the wake of an austerity program that included cuts in civil servants and higher taxes.

The PA said it faces a $1.1 billion budget deficit in 2012 amid a sharp drop in foreign aid. Fayad, a former senior official in the International Monetary Fund, has proposed early retirement for government workers in a plan to reduce expenditures.

Protesters, many of whom banged pots, said the price of staples has risen sharply over the last year. A box of eggs in the West Bank was said to cost nearly $5, and a kilogram of chicken nearly $4.

Fayad has also called for a new personal tax, with a minimum of five
percent and a maximum of 30 percent of income. The prime minister also said
property tax would also increase.

“The government must respond to the suffering of citizens,” Nasser Abu
Jeish, a member of the People’s Party, said. “If they don’t respond,
protests will be held across all Palestinian cities.”

Protests have also been reported by PA civil servants and university
students. The complaints have included government corruption and the sharp
rise in tuition.

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