The World Bank recommends that donor countries stop transferring aid funds via the office of Palestinian Authority Chairman Mahmoud Abbas' office, saying such means of bypassing the Hamas government have hurt PA economic reforms.

In a new report, the bank advises a return to channeling the money to the Palestinian Finance Ministry. It also recommends the PA dismiss some 6,000 workers to help deal with the budgetary crisis which the bank says is threatening the existence of the authority.

The bank calls on the PA to stop hidden unemployment at its ministries and security organizations. Among the 6,000 employees are "ghost workers" - people listed as employees who are not working or who hold more than one position.

	Advertisement

The World Bank also wants the PA to institute a two-year hiring freeze. It says the employment of workers in the authority has become a tool to create influence and patronage.

The report, presented last week to the PA and the donor countries, discusses the possibility of renewing the transfer of funds ahead of the establishment of a unity government.

It suggests that the PA reformulate its pension law. It notes that the pension now offered to PA workers relative to their salaries is much higher than that in the countries donating money to the PA.

The bank also calls on Israel to transfer the taxes it has collected on behalf of the PA to the PA treasury. It states that Israel should drastically improve the passage of goods and people in the territories and to implement the passage agreement of November 2005.

The PA is once again called on to reduce the number of its security organizations to three from 13 and to reduce the number of people serving in them in keeping with the numbers stated in the Oslo Accords and natural increase.

The report notes that the PA's income from taxes dropped by roughly $17 million a month on average during the first six months of the Hamas government (March-September 2006). In the same period in 2005, the PA's average monthly income was $104 million. The PA's expenses dropped by about half in the same period in 2006, but stood at about $93 million a month. The deficit for 2006 reached about $1 billion.

The PA's gross domestic product fell by 8 to 10 percent during 2006, but the PA continued to hire new workers. In the first quarter of 2006 alone, 1,300 new workers were hired by government offices and 6,800 for the security forces.

Since 1999 the number of salaried PA workers has increased by about 9 percent a year, although the natural increase in the population is much lower.