No More Free Cars as PA's Fayyad Tightens Belt in Bid to Reduce Deficit

Palestinian Authority Prime Minister Salam Fayyad is leaving no stone unturned in his fight against his government's budget deficit. The government he heads decided on Monday to do away with all the cars that had been available for the private use of West Bank PA officials.

According to the figures of one PA official, 2,000 vehicles are used for official and personal purposes. From now on they can only be used for official purposes. The official estimated the change will save $20 million a year.

This is only the first step in a cost-cutting plan that may also include taking away the cell phones provided to PA officials.

Only PA cabinet ministers and their deputies will be allowed to keep official cars for personal use.

There are doubts that these steps will significantly reduce the PA's budget deficit, which at $1.2 billion is $500 million less than it was two years ago.

But, unlike the situation two years ago, many donor states have failed to meet their commitments to the Palestinians. In 2009 donor funding was $1.3 billion, and although the money was late in coming it did arrive by the middle of the year.

Not surprisingly, at least to PA officials, most of the tardy donors are Arab states, especially those in the Gulf. Of the $500 million pledged by these states, the PA has received only $130 million.

Fayyad's efforts are not only aimed at cutting the deficit. They are also directed at the international community in general and the donor states in particular, which are to convene next month for an update on the reforms and on progress in the Palestinian economy.

The economic progress is genuine. PA government spokesman Ghassan al-Khatib said the government now pays for 65 percent of its budget out of local revenues, compared to only 47 percent a year ago. He attributed the improvement to efficiency measures undertaken by Fayyad toward efficiency and cuts in government spending.

International Monetary Fund mission chief Osama Kanaan cites several areas in which the PA government has made improvements. These include improving the management of public spending by assigning priorities and reducing expenses though complete transparency; changing the way electricity bills are paid; providing welfare for the needy only, rather than to anyone who requests aid; restructing pension plans and making tax collection more efficient .

All these steps, says Kanaan, have helped to increase government revenues while trimming expenses.

Fayyad is keen on meeting the goals he has set for proper governance, but as he likes to remind anyone willing to listen none of this matters unless an independent Palestinian state is established.