Debt-ridden PA selling company shares to raise funds
By Arnon Regular and Agencies
The Palestinian Authority, facing debts of hundreds of millions of dollars, has started selling its shares of large Palestinian companies to finance its budget for this year.
The Palestinian Investment Fund (PIF), founded at the end of 2002 and with direct control of PA investments in the territories and overseas, has in recent weeks sold 35 percent of its stock in Jewel, a Palestinian cellular telephone company, to raise more than $40 million, Palestinian sources say.
The shares were sold to PalTel, a company controlled by a group of businessmen. PalTel, which is involved in a number of other companies that do business in PA territories, controls a majority of assets of Jewel, which is the sole cell phone company servicing PA-controlled areas.
The sources explain that the recent sale of additional company shares to PalTel by PIF, which is headed by PA Finance Minister Salam Fayad, was carried to reduce the PA's deficits. Those deficits have mounted as a result of a months-long freeze on the transfer of support from Arab countries to the PA, as well as the deferral of the transfer of funds from Western sources, which have conditioned their continued assistance upon the carrying out of reforms in the PA.
Sources indicate that the PIF is considering the sale of its shares in other companies in order to lessen the PA's debts. Fayad and Palestinian Prime Minister Ahmed Qureia have been making trips around the Arab world, Europe and North America, in an attempt to raise money for the authority's shrinking coffers.
Due to its financial woes, the PA has in recent months deferred the payment of wages to security personnel and other officials. Wage payments represent the PA's largest budget expenditure.
The Palestinian Authority announced yesterday that it would stop paying members of its security forces in cash and would instead deposit salaries in their bank accounts, as part of reforms demanded by donors.
The move will affect more than 40,000 security men in a dozen organizations.
"A decision has been taken by the cabinet to pay the salaries of the security forces through bank accounts," Qureia said after a cabinet meeting.
The decision was aimed at meeting demands by donor countries for heightened financial transparency in the PA which has been plagued by accusations of waste and corruption.
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