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Cablegate: Response On Fiscal Transparency in the Palestinian

VZCZCXRO7178
OO RUEHROV
DE RUEHJM #0554 0881026
ZNR UUUUU ZZH
O 281026Z MAR 08
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1039
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS JERUSALEM 000554

SIPDIS

SENSITIVE
SIPDIS

NEA/IPA FOR SHAMPAINE/SACHAR; EEB/IFD/OMA FOR SNOW AND
FIGUEROA; H FOR BUTTE-DAHL; NSC FOR PASCUAL; TREASURY FOR
CONNOLLY
DEPT PLEASE PASS TO USAID FOR MCCLOUD/BORODIN

E.O. 12958: N/A
TAGS: EAID ECON KWBG PREL KPAL EFIN
SUBJECT: RESPONSE ON FISCAL TRANSPARENCY IN THE PALESTINIAN
AUTHORITY

REF: STATE 16737

1. (U) The Palestinian Authority (PA) under Prime Minister
and Minister of Finance Salam Fayyad is committed to fiscal
transparency and has instituted a number of reforms since
taking office in July 2007.

2. (U) On March 26, Fayyad relaunched the Ministry of Finance
website (www.pmof.ps) to serve as the central point for
publication of PA budget, revenue and expenditure information
on a monthly basis.

3. (SBU) The following responses are keyed to the questions
in paragraph 7 of reftel.

-- Although the 2008 budget has not yet been formally
adopted, the PA has announced that, when approved by the
Cabinet and President, the budget will be made public via the
Ministry of Finance website.

-- The PA makes revenue and expenditure information publicly
available. Such information has been distributed to
international donors and is now posted on the above website.
The PA is committed to publishing monthly reports that
reflect actual revenues and expenditures by each ministry,
wage payments for civilians and security, and external budget
support received.

-- Information produced by the current government is
meaningful and accurate. Revenue and expenditure information
for 2006 and 2007, during the period of the Hamas government,
is understood to be incomplete. The current government has
cooperated with IMF efforts to review revenues and
expenditures during that time period, but some uncertainty
remains, particularly in the area of expenditure commitments.


-- Any gaps on fiscal transparency are the result of capacity
limitations, not lack of will. PM Fayyad has publicly
committed himself and his government to full transparency,
and he has repeatedly opened the PA's books to the IMF and
donors, including the USG. As part of the transfer of USG
assistance to the PA budget, USAID hired an independent
auditor to review the PA's public financial management
structures. The review uncovered no significant fiscal
irregularities.

-- In addition to a number of programs that support good
governance, the USG specifically supports improvements in the
transparency of the overall Palestinian financial system
through USAID's Modernizing Financial Infrastructure program.

-- A number of donors provide assistance to the Ministry of
Finance. In particular, the European Commission (EC) has
provided training to Ministry officers and supported the
creation of an external auditing institution. Fayyad has
consistently sought IMF assistance and advice, including two
visits since July 2007 by technical specialists in the area
of public financial management. The PA has also asked the
IMF and the World Bank to provide quarterly reviews of
implementation of the Palestinian Reform and Development
Plan, to include assessments of both budget execution as well
as overall financial management.

-- According to the IMF's Senior Resident Representative for
the West Bank and Gaza, because the PA is not a member of the
IMF, it does not qualify for voluntary reporting on standards
and codes.

4. (U) The full text of PM Fayyad's March 26 statement on
fiscal transparency can be found on ConGen Jerusalem's
unclassified intelink site at:

SIPDIS
http://www.intelink.gov/communities/state/pal econ.
WALLES

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