Hamas-run government in Gaza to reduce salaries amid growing financial crisis

The Hamas-run government in the besieged coastal enclave will reduce its employees' salaries due to a financial crisis, a senior official said on Monday. 

Speaking to The New Arab, Awni al-Basha, undersecretary of the Gaza Finance Ministry, said that reducing employees' salaries was a decision born out of an emergency and seeks to temporary alleviate the government as financial crises worsens.

"Reducing the rate of salaries will start in August, and it will last for a few months. We will add the deducted from the salaries to the employees' financial entitlements," the official said, without mentioning the rate of the salaries' deduction.

However, sources inside the ministry, who preferred to be unnamed, told The New Arab that the Hamas employees will receive about 40 per cent of their salaries instead of 60 per cent. 

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The Hamas-run government in Gaza has been facing a financial crisis since the outbreak of the Russia-Ukraine conflict five months ago as it sought to offset price increases of several commodities, mainly fuel, to ease the residents' financial burdens, according to the official. 

As a result, the official further said, the ministry was forced to borrow from Gaza-based banks to disburse the salary on time. He pointed out that the ministry cannot bear more debts in the upcoming months. 

The ministry has urgently prepared a plan to overcome the financial deficit, including reducing the operational budgets of the Gaza ministries and vowed that the crisis over the employees' salaries will soon be resolved, he said. 

The Hamas-run government heavily relies on customs revenues, taxes, import and export permits, and some external financial grants, mainly from Qatar, for its expenditures. 

Every month, the government in Gaza pays the salaries of its employees and covers several operational budgets of the ministries while the Palestinian Authority helps in paying expenses related to electricity, medical supplies, and education. 

In 2007, the Islamic Hamas movement forcibly controlled the coastal enclave following rounds of fightings with the security forces loyal to the Fatah-led Palestinian Authority, which refused to include Hamas in the government once it won the legislative elections in 2006. 

ٍSince then, the movement hired about 50,000 employees to operate its ministries, according to Hamas-run governmental data. 

Starting from 2013, the Hamas employees had received only 40 per cent of their salaries, while the government added the rest to their entitlements. The percentage of its employees' salaries was raised to 60% in 2021.

Employees in Hamas expressed anger over the planned reduction in their salaries, especially in light of skyrocketing prices in the besieged coastal enclave. 

"We can hardly keep our families afloat amid the unprecedented economic crisis," one of the employees, who preferred to be unnamed, told The New Arab.

"I receive about $US 350 a month; a local bank deducts about $US 100 in favour of a loan, while the electricity deducts about $US 50(...). So, I only have $US 200. This is not enough to support my family for two weeks," the 42-year-old father of five said. 

Day by day, the employee further added, the situation is getting worse. He accuses the government's decision-makers of being responsible for failing to solve the crises.

"Because of the poverty that most government employees suffer from, some of them were forced to look for additional work, like working as taxi drivers, to be able to keep their families afloat," the employee said.  

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"The Hamas-run government is suffering from economic mismanagement and a lack of strategic planning," Khalil Naser, a Gaza-based economist, said to The New Arab.  

"To control the prices of fuels and some commodities for a temporary period of months, it will cause a major economic crisis when the value of the salaries of its employees are reduced," he said. 

Moreover, he added, "Unfortunately, the measures of the Gaza government did not succeed in controlling prices and have failed in preventing the price hikes from reaching the Strip."