Tracking External Donor Funding.pdf - NDC

2.2.6.1 Aid versus GNI
As table 7 shows, the percentage of aid in comparison to
GNI has been extremely high leading up to the 2002
height of the Second Intifada. By constituting around a
third of GNI, the sustainability of the Palestinian
economy is questionable – as the removal of aid will
bring disastrous effects. The huge increase in aid flows
with modest growth in GNI means that in 2008, external
aid constituted as much as 60% of the Palestinian GNI.
2.2.6.2 Aid versus Government Expenditures
As figure 9 shows, aid flows in 2002 were around 163%
of government expenditures as a result of the
humanitarian crisis that shifted financing from
Development to Emergency. During the years 2000 and
2005, aid constituted as much as half of government
expenditures, as the PA began to accumulate massive
deficits. In 2006 aid was almost 100% of public
expenditures, as the PA was prevented from collecting
taxes or clearance revenues by Israel. These revenues
were eventually freed up in the latter half of 2007 and the
beginning of 2008. Despite the return of other revenue
streams, aid as a percentage of government expenditure
increased from 73% and 99% between 2007 and 2008.
Figure 9: External Aid versus Government Expenditures
(1999-2008 – Millions USD)
3500
3000
2500
2000
1500
1000
500
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Gov't Expenditure
International Aid
Source: PCBS- National Accounts (2009a), OECD/DAC and World Bank Databases
(2009)
2.2.6.3 Aid versus Government Deficits
Since 2000, the PA has recorded high levels of deficit.
However, more recently aid flows through PRDP have
generated a surplus, allowing the government to carry
out development projects in addition to emergency and
restructuring programs. Between 2005 and 2008 the
bottom line changed from a 275 Million USD deficit to a
surplus of 270 Million.
Table 8: Government Budget Surplus (Deficit) Before and After Aid (1997-2008 – Millions USD)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Net Domestic Revenues Public (Gov't) Revenues 942 939 273 290 747 1,050 1,370 722 1,616 1,780
Total Expenditure and Net Lending Public (Gov't)
Expenditures
937 1,199 1,095 994 1,240 1,528 1,994 1,426 2,567 3,273
Recurrent Budget Surplus (Deficit) before Aid-
Budget support
5 -260 -822 -704 -493 -478 -624 -704 -951 -1,493
Recurrent Budget Surplus (Deficit) After Aid-
Budget support
28 -206 -291 -236 -232 -125 -275 34 61 270
Source: PCBS – National Accounts (2009a)
Note: In 2005, external donors withheld aid to the PA as a consequence for not meeting a series of benchmarks.
17