Public finance in Palestine

Abstract

1. Purpose of the study: This study is intended to examine in depth the public finance situation in Palestine including the West Band and Gaza strip, in order to suggest measures for economic development. To accomplish this purpose, all laws, by-laws, policies and procedures of public finance issues have been investigated and analyzed, structured interviews were conducted with relevant public employees and budget and financial staff, relevant questionnaires were used to collect the needed data wherever it was needed, fiscal data for central and local authorities were gathered to cover all periods of the study, and finally an intensive review of the related literature was considered. 2. Public finance may be defined in a general term "as being concerned with the manner in which public services are provided1". However, this definition is not clear in determining the activities of public finance. This is because there are various criteria that may be used to confine the framework of public finance which lead to different definitions such as; *The source criterion, which means goods and services provided through government budget are public services. *The goods criterion, which means that all non-marketable goods and services are considered as public services such as defense and justice. *The consumption criterion, which means that all collective consumption goods and services are considered as public services. *The price criterion, which means that free or subsidized goods and services are considered public services2. However, the above criteria may be considered together in stating public goods and services. 3. Framework of the study: For the purpose of this study a broad definition of public finance based upon the above mentioned criteria, may be considered as follows "goods and services which are provided by government and quasi budget, non-marketable goods and Public Finance in Palestine Nidal Rashid Sabri 5 services, collectively consumed goods and services, free and subsidized goods and services are considered public goods and services". Accordingly, this paper included authorities which play a role in one way or another in providing public services in Palestine beside the public services offered by Israeli military government as an occupying authority. This will cover various issues of public finance such as legal, administrative and fiscal aspects, in order to evaluate to what extend the present situation fulfill the functions of public finance. The functions of public finance may be classified as follows3: * allocation function (price mechanism) * Stabilization function (economic policy) * Distribution function (social policy) However, the public finance in this study should consider both public services as well as the ways of financing such services and other collected revenues by the government. 4. Explanatory notes: Various explanatory notes should be indicated here as included in this study; a- The term Occupied Palestinian Territories (Palestine) means both Palestine. b- A fiscal year such as 1991 means a calendar year of 1991 and/or a year from 1-4- 1991 to 31-3-1992 and-or 1-7/1991 to 30-6-1992 as UNRWA Budget. c.- All financial data in this study are expressed in US $ in current prices to facilitate comparison and analysis using the exchange rates as stated in a schedule presented in the appendix. d.- The budget financial data for local authorities and UNRWA are the actual data, while the government data are the budgeted data which are very close to the actual and usually implemented as stated.