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About half of the Palestinian Authority budget deficit was caused by seizures imposed by Israeli courts on PA funds, Palestinian sources say.

A PA treasury source says the sum of confiscated funds reached some NIS 1 billion this month, consisting of levies, taxes and customs collected by Israel for services and merchandise intended for the PA.

The cumulative deficit this year is $490 million, while the PA's current budget is $1,444 billion. Palestinian treasurer Salam Fayyad is expected to cover some $330 million with help from the donor states, but has not found funding for the remaining $160 million.

Consequently the treasury will not be able to transfer funds to the pension fund and to the Legislative Council. It may also fall behind in paying salaries and other current expenses.

The failure to transfer pension funds will prevent the retirement of some 2,000 security organization employees, whose retirement was one of the reform requirements demanded of the PA.

Israeli judges usually impose seizures on Palestinian funds in response to Israeli citizens' damage suits against the PA in recent years, before the court has reached a verdict. They do this despite the state's objection, as expressed by the prosecution and by former director of the prime minister's bureau, Dov Weisglass.

Attorney Yossi Arnon, representing the PA, said the suits are much higher than customary. In case of death, Arnon said, Israeli courts rule up to NIS 1 million for compensation, while in suits against the PA for terror attacks the sums reach tens of millions of shekels.

Arnon says that even if some of the plaintiffs win, the court will allocate them sums similar to those meted in accident suits. But the seizures imposed on the PA bear no relation to the sums usually allotted or to the case's chances of success, but to the inflated sums presented by the suitors.

Some two thirds of the PA's income - $52 million a month - derives from customs, taxes and levies that Israel transfers to them for merchandise passing through it and various services. Taxes and customs collected inside the PA provide an additional $25 million.

A source in the donor states told Haaretz the frustration over the deficit is double, because Fayyad managed to increase the PA's income this year by 36 percent and raise the the GDP from 22 to 24 percent, mainly due to his resolve to carry out the reforms and after canceling the fuel monopoly, ensuring that the income goes to the treasury.

The source said that the Israeli treasury sometimes transfers the sums collected in the PA earlier than scheduled, so that the Palestinian treasury can pay wages in time. A source in the Palestinian treasury said that official Israeli representatives state that despite the state's objection, they cannot interfere with the courts' decisions.

At the beginning of last month, the Tel Aviv District Court accepted the PA's appeal and canceled the confiscation order imposed a month earlier on NIS 36 million of PA funds. Judge Altuvia Magen said there are not sufficient grounds for such a sum in the suit presented for the murder of an Israeli (NIS 80 million).

He also doubted the grounds for setting the sums in other similar suits, noting that according to a previous ruling, temporary seizures must not be imposed as a matter of routine and that the defendant's property rights take precedence over the appellant's rights, as decided on in the verdict.