By Ishac Diwan, Radwan A. Shaban
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Extra info for Development Under Adversity: The Palestinian Economy in Transition
All figures are represented in percentage of respondents. : Will the proposed Palestinian-Israeli agreement improve economic conditions in the WBGS? : With the implementation of self-government, do you believe that your standard of living ---- ? 2 (August-September Improved Worsened Other (March 1997) Improved Worsened Other 1995) (box continues on next page) Development Under Adversity 20 Deteriorating Living Conditions Declining Standard of Living: Real Per Capita Consumption Expenditure Declined by 15 Percent standard of living are borne out by statistical eviPerceptions of a deteriorating dence.
527 billion had been disbursed. Greater decline in the standard of living in the West Bank compared to Gaza Strip can be explained by the fact that the majority of Palestinian civil service institutions, including the police force, were set up in Gaza Strip. In addition, the expansion of PA powers over urban centers of the West Bank started in 1995, following the Oslo I1 Accords. Thus, the Gaza Strip had a greater proportion of government expenditure and donor money than the West Bank, which cushioned the decline in consumption expenditure.
Under the PA, however, central administration expenditures have risen rapidly with the rising wage bill. In contrast, PA revenue collection has been efficiently managed, is probably close to its potential level, and is unlikely to appreciably increase in relation to GDP. Fiscal developments in 1995 were more favorable than anticipated, due to strong revenue performance and expenditure restraint. As a result, the recurrent deficit for 1995-96 was about $100 million per year (3 percent of GDP). Recurrent expenditure grew as a result of emergency programs related to prolonged border closures and the continuous rapid growth in the civil service.