The Ministry of Finance demanded that banks pay 50% of the salaries of employees to bear the cost of advances (Al Jazeera)

The Palestinian Ministry of Finance said that an advance equivalent to half the salary of employees working in the government sector will be disbursed from banks for the month of October.

"An advance will be disbursed from banks to public sector employees and retirees at 50% of the salary and a minimum of 1800,481 shekels ($<>), next Wednesday," the ministry said in a joint statement with the Palestinian Monetary Authority.

The statement explained that the Ministry of Finance "bears the cost that will result from these advances."

The Palestine Monetary Authority stated that it has instructed banks to disburse these advances to employees in order to reduce the effects of liquidity scarcity, and to help individual and corporate borrowers deal with the effects of income interruption or the decline in cash flows due to the aggression on the Gaza Strip, and to protect their credit ratings.

This comes after the PA refused to receive tax funds collected by Israel on its behalf for goods entering the Palestinian market through it in exchange for a 3% commission.

The PA's refusal to receive these funds came last month due to the Israeli government's decision to deduct an amount of them intended for the Gaza Strip, including paying salaries, operating the health sector and buying fuel, after the "Al-Aqsa Flood" operation launched by the Palestinian resistance on the seventh of last October.

Tax funds, or clearing funds, constitute two-thirds of the Authority's budget.

The Governor of the Palestinian Monetary Authority, Firas Melhem, announced that the new instructions:

• Allows the granting of advance/financing at the expense of salary to employees.

• Allows existing borrowers to postpone a number of installments due or expected to mature in the near future, or reduce the value of the installment.

• It also allows individuals and companies to obtain emergency commercial loans to finance working capital and repay any contingent liabilities.

The Governor pointed out that the PMA recently carried out stress tests and tests to examine the ability of the banking system to withstand various scenarios represented in the failure of part of the credit portfolio as a result of the repercussions of the war on the various economic sectors, and these tests included scenarios that simulate the exposure of some economic sectors to a shock or successive shocks due to the decline in the economic cycle, and the impact of this was measured on the financial indicators of the banking system, including capital adequacy indicators, as the Monetary Authority hastened since the outbreak of the war to request Banks formed initial provisions to face various risks and reflected this on the financial statements on 30/09/2023.

The results showed the ability of the banking system to maintain a capital adequacy ratio and liquidity levels that comply with the regulatory requirements prescribed under the instructions and best practices.

Acceptable capital and liquidity levels are among the most important indicators of financial soundness, and therefore the PMA affirms the soundness and financial durability of the Palestinian banking system, and that it will continue to take all necessary measures to maintain financial stability and encourage economic growth under these very difficult circumstances.

One of the Israeli incursions on the outskirts of the West Bank city of Nablus a few days ago, which entails a complete cessation of any activity (Reuters)

Economic decline

Earlier, data from the Palestinian Ministry of Economy revealed on Monday that the performance of 85% of economic establishments declined as a result of the continuous invasions and incursions carried out by the Israeli occupation in Palestinian cities, camps and towns.

The ministry's Economic Monitor showed a decline in the average number of employees in 41% of economic establishments in the West Bank as a result of the economic deterioration in various sectors of the economy against the backdrop of the repercussions of the ongoing Israeli aggression, with the almost complete cessation of production in the Gaza Strip.

According to the data, most establishments witnessed a decline in monthly working days by an average of 36% to 42%, while the production capacity of 91% of industrial establishments deteriorated by an average of 43%.

According to the Economic Observatory, 77% of establishments suffer from difficulty in moving and distributing goods between cities as a result of the incursions and closures carried out by the Israeli occupation, while 16% of establishments were forced to close completely or partially, in addition to the decline in monthly sales of 97% of establishments.

The Observatory also showed a decline in the Jerusalem index by 11.4% since the beginning of the war on Gaza, compared to an increase of 2.3% recorded from the beginning of the year until the sixth of last October.

The data showed that the industrial sector was the most affected as a result of the occupation violations in the northern governorates after the war on Gaza, where 91% of establishments indicated an average decline in their production capacity by 43%, and the services sector is one of the sectors whose performance declined clearly after the war, as 63% of establishments indicated an average decline in the number of employees by 62%.

Source : Al Jazeera + Agencies