2025-06-24-世界银行-巴勒斯坦权力机构公共支出审查_螺旋式财政危机中的政策优先事项（英）_172页_4mb

Summary of the Public Expenditure Review of the Palestinian Authority: Policy Priorities Amid a Spiraling Fiscal Crisis

Core Content

This report provides a comprehensive analysis of the fiscal and public expenditure challenges facing the Palestinian Authority (PA) in the West Bank and Gaza. It outlines the impact of the ongoing conflict, particularly in Gaza, on the region's economic and fiscal stability. The review assesses key areas of public spending, including the wage bill, pension system, health sector, and education system, and identifies reform priorities to address the fiscal crisis and improve public financial management.

Main Views

1. The Conflict and Fiscal Crisis

• The ongoing conflict, especially in Gaza, has intensified the pre-existing economic and fiscal fragility of the West Bank and Gaza.
• Israeli occupation and restrictions on movement, economic activity, and resource access have severely constrained the PA's ability to generate revenue and implement independent fiscal policies.
• The near-total blockade of Gaza since 2007 has led to significant economic decline, with GDP contracting by 27% in 2024, and unemployment reaching as high as 80% in Gaza and 33.5% in the West Bank.
• The conflict has reversed recent reductions in the PA's fiscal deficit, increasing it to 15% of GDP in 2024.

2. Fiscal and Revenue Challenges

• The PA has historically relied on domestic public debt and arrears to finance its large public expenditures, especially as foreign aid has declined.
• Public debt reached 85.7% of GDP by end-2024, with arrears accounting for 55% of total debt.
• The total stock of arrears to the private sector is estimated at US$1.5 billion (9% of GDP), while arrears to the public pension fund and public employees are also substantial.
• The PA's fiscal flexibility is limited, with expenditure rigidity at 80%, higher than any comparator group.

3. Public Expenditure Structure

• Public expenditure in the West Bank and Gaza is relatively high by regional standards, with recurrent spending (primarily the wage bill) dominating public budgets.
• Capital investment is low, averaging about 2% of GDP, far below that of peer countries, which negatively affects long-term growth.
• The wage bill accounts for a large share of public spending and is a key area for reform.

4. Key Sectors

• Civil Service: The wage bill is the largest component of public spending. It is driven by high salary levels, extensive allowances, and rigid employment structures.
• Pension System: The system is underfunded and faces a growing deficit due to the aging population and rising pension costs. The report outlines fiscal simulations and reform options.
• Health System: Public health spending is high but inefficient, with significant reliance on out-of-pocket payments and limited coverage. The system is under strain due to the conflict.
• Education System: Education spending is substantial but not effectively translated into outcomes. The report highlights the need for improved efficiency and quality of education services.

Key Information

Fiscal Reforms

• The report recommends measures to reduce the wage bill, including wage freezes, indexation, allowance reductions, and attrition targets.
• It also suggests reforms to the pension system, such as introducing defined-contribution schemes, adjusting eligibility rules, and improving governance and transparency.

Public Financial Management

• There are significant challenges in public financial management, including low budget execution rates, poor accountability, and inefficient use of resources.
• The PA needs to improve its fiscal planning, budget execution, and public financial management practices to ensure sustainable and effective spending.

Sector-Specific Challenges

• Wage Bill: High and rigid, with a significant portion allocated to allowances and benefits. Reform tools are proposed to reduce costs and improve efficiency.
• Pension System: Underfunded and unsustainable. The report provides scenarios for reform, including changes to retirement age and pension benefits.
• Health System: High public spending but poor service delivery and inefficiencies. The report suggests improving financing mechanisms and service delivery.
• Education System: High spending but low educational outcomes. The report recommends better resource allocation, improved teaching quality, and enhanced monitoring and evaluation.

Conclusion

The PA faces a severe fiscal crisis driven by the ongoing conflict, Israeli restrictions, and declining foreign aid. Public expenditures are high and rigid, limiting fiscal flexibility and economic growth. Key sectors such as the civil service, pension system, health, and education require targeted reforms to improve efficiency, sustainability, and service delivery. Ensuring adequate and predictable budget support from donors is critical for the PA to address the fiscal challenges and rebuild the economy, particularly in Gaza.