RAMALLAH, March 8 (JMCC) - The Palestinian Authority
expects its revenues this year to increase by 20 percent over 2009, exceeding two billion dollars for the first time.
This projection is a sign of administrative reform in tax collection together with robust economic growth in areas administered by the Palestinian Authority, Palestinian prime minister Salam Fayyad
Expenditures are projected at $3.13 billion, of which about half has been allocated to Gaza.
The rationalization of expenditures in 2010 is expected to improve in three respects. First, the expenditures for wage bills will be shifted towards non-wage expenditures (from 40 percent to 42 percent of recurrent spending). Second, there will be a shift towards social expenditures (from 39 percent to 41 percent of recurrent spending) and third, there is a shift from current spending to development expenditures (from 12 percent of total expenditures to 18 percent).
The Palestinian government is closer to financial stability as the wage bill declines in GDP share from 22 percent in 2009 to 20 percent in 2010.
Other expenditures will decline in 2010, since the emergency allocation in 2009 won’t be included and the Palestinian Authority expects that the implementation of the Electricity Law will help net lending to decline substantially.
Expenditures for education, health and social affairs increased their share from 13.8 percent of GDP in 2009 to 15.1 percent in 2010. Public spending on development in 2010 is expected to increase to $667 million, of which $350 million will be allocated to community development projects.
The recurrent deficit is projected to decline from $1.45 billion in 2009 to $1.21 billion in 2010. In terms of GDP, the deficit will fall from 22 percent to 16 percent which would be the lowest deficit as a share of GDP since the year 2000. The total fiscal deficit projected at USD 1.88 billion is expected to be financed by donors.
PA expects that inflation will rise to three percent in 2010, compared to 2.5 percent in 2009. Real economic growth is expected to increase to seven percent.