Immense amount of international donations inflate Palestinians' disposable income
07 February '10
Palestinian Prime Minister Salam Fayyad has been crowned as "the Palestinian Ben-Gurion at the recent Herzliya Conference. However, there is a great gap between the achievements attributed to him and his abilities in practice.
Fayyad is credited with changing the corrupt PA apparatus, but even in the financial realm where his expertise lies, his abilities are mostly manifested through the drafting of impressive documents as well as fundraising.
Meanwhile, the absurdity inherent in his statements regarding "Palestinian independence within two years" is clear to anyone familiar with the Palestinian economy. Fayyad is a former World Bank official, but even on the financial front his deeds are far from the image he has nurtured.
The Palestinian economy is the only place in the world where the per capita GDP is less than half the disposable income per capita. This is the result of three factors:
1. The Palestinians barely produce anything. Most of their GDP comes from government expenditures by the PA itself.
2. The Palestinians receive immense sums donated by the world.
3. Tax collection is almost unheard of, aside from the taxes collected (for Fayyad) by the Israeli government, which provides the PA with NIS 450 million (roughly $120 million) monthly; this comprises about 40% of the PA's budget.
The result is clear: Low GDP, but high disposable income. Indeed, it's an economic miracle.
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