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Palestinian finance minister submits resignation
By Wafa AmrSat Nov 19, 8:52 PM ET
Palestinian Finance Minister Salam Fayyad, who has battled parliament to force it to carry out fiscal belt tightening measures, has submitted his resignation ahead of legislative elections due in January.
Fayyad, a former International Monetary Fund official, said on Saturday he wanted to step down because he was considering running in the polls, and turned in his resignation several days ago as required under Palestinian law.
Other officials who asked not to be named said his resignation was in protest against the government's refusal to implement concrete fiscal reforms.
"Our election law requires that cabinet members considering running for parliament should resign two months before the election date, and I am one of those," Fayyad told Reuters. He did not say whether he had made a final decision on running.
The aid-dependent Palestinian Authority is under pressure to carry out fiscal reforms, and Fayyad's resignation followed threats by foreign donors in October to suspend direct budget support unless ballooning public wage costs were reversed.
There was no immediate word on whether Prime Minister Ahmed Qurie would accept the resignation, which comes as Palestinians are under increasing scrutiny over how they run the Gaza Strip -- seen as a proving ground for statehood following Israel's withdrawal after 38 years of occupation.
"His resignation is going to affect the Palestinian Authority very negatively," political analyst Ali Jarbawi said. "He was trusted by the international community, and this trust will disappear when he goes."
The World Bank has said boosting the Palestinian economy is crucial to peacemaking. Donors have given an average of $25 million a month this year in budget support for the Palestinian Authority, according to figures from an international envoy.
WORLD BANK CRITICISM
The Palestinian economy has withered since the start of an uprising against Israel in 2000, hampered by violence as well as mismanagement and corruption that discouraged donors. Fayyad has said a suspension of donor aid could threaten economic revival.
In a quarterly report released earlier this week, the World Bank criticised the Palestinian Authority sharply for not following advice by Fayyad to restrain spending. Earlier reforms by Fayyad had earned him international praise.
The report also said the Palestinian Authority had created a serious fiscal crisis for itself and that spending on salaries was "essentially out of control."
"In spite of the efforts of the finance minister to maintain discipline, the PLC (parliament) and cabinet have shown little appreciation of the need for restraint," the report said.
"If the Palestinian Authority is not exercising fiscal restraint, it becomes very difficult for some donors to justify continued budget support."
Despite opposition from Fayyad, the Palestinian parliament voted to increase wages earlier this year following strikes and protests by civil servants. Fayyad had met with lawmakers repeatedly to warn that such a move would complicate reforms.
He had called in July for policies to restrain public spending and told parliament the overall deficit was expected to rise to $900 million in 2005 from $660 million a year earlier.
To keep the deficit under control, he proposed the government operate with a $2.2 billion budget, reducing its military and civil wage bill through a programme under which government workers must retire at age 60.
