Palestinian Finance Minister Salam Fayyad, who has battled
parliament to force it to carry out fiscal belt tightening
measures, has submitted his resignation ahead of legislative
elections due in January.
Fayyad, a former International Monetary Fund official, said on
Saturday he wanted to step down because he was considering running
in the polls, and turned in his resignation several days ago as
required under Palestinian law.
Other officials who asked not to be named said his resignation was
in protest against the government's refusal to implement concrete
fiscal reforms.
"Our election law requires that cabinet members considering running
for parliament should resign two months before the election date,
and I am one of those," Fayyad told Reuters.
He did not
say whether he had made a final decision on running.
The aid-dependent Palestinian Authority is under pressure to carry
out fiscal reforms, and Fayyad's resignation followed threats by
foreign donors in October to suspend direct budget support unless
ballooning public wage costs were reversed.
There was no immediate word on whether Prime Minister Ahmed Qurie
would accept the resignation, which comes as Palestinians are under
increasing scrutiny over how they run the Gaza Strip - seen as a
proving ground for statehood following Israel's withdrawal after 38
years of occupation.
"His resignation is going to affect the Palestinian Authority very
negatively," political analyst Ali Jarbawi said.
"He was
trusted by the international community, and this trust will
disappear when he goes."
The World Bank has said boosting the Palestinian economy is crucial
to peacemaking. Donors have given an average of $US25 million
($NZ36.4m) a month this year in budget support for the Palestinian
Authority, according to figures from an international
envoy.
World Bank criticism
The Palestinian economy has withered since the start of an uprising
against Israel in 2000, hampered by violence as well as
mismanagement and corruption that discouraged donors.
Fayyad has
said a suspension of donor aid could threaten economic
revival.
In a quarterly report released earlier this week, the World Bank
criticised the Palestinian Authority sharply for not following
advice by Fayyad to restrain spending. Earlier reforms by Fayyad
had earned him international praise.
The report also said the Palestinian Authority had created a
serious fiscal crisis for itself and that spending on salaries was
"essentially out of control".
"In spite of the efforts of the finance minister to maintain
discipline, the PLC (parliament) and cabinet have shown little
appreciation of the need for restraint," the report said.
"If the Palestinian Authority is not exercising fiscal restraint,
it becomes very difficult for some donors to justify continued
budget support."
Despite opposition from Fayyad, the Palestinian parliament voted to
increase wages earlier this year following strikes and protests by
civil servants.
Fayyad had
met with lawmakers repeatedly to warn that such a move would
complicate reforms.
He had called in July for policies to restrain public spending and
told parliament the overall deficit was expected to rise to $US900
million ($NZ1300m) in 2005 from $US660m ($NZ960m) a year
earlier.
To keep the deficit under control, he proposed the government
operate with a $US2.2 billion ($NZ3.2b) budget, reducing its
military and civil wage bill through a programme under which
government workers must retire at age 60.
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