UPDATING OF THE TRIPARTITE ACTION PLAN ON
REVENUES, 

Preamble

The Tripartite Action Plan defines understandings reached on the part of the international donor community, the Palestinian Authority and the Government of Israel, which all sides have pledged to fulfil. The Ad Hoc Liaison Committee (AHLC) is entrusted to monitor compliance of all parties with these provisions.

The objective of the Tripartite Action Plan is to assist the parties in their effort to enhance the peace process based upon the signed agreements (including protocols and memoranda) by providing further economic and financial assistance to the Palestinian people. The parties look forward to activating all necessary measures to achieve this end and to accelerating the disbursement of commitments to expedite implementation of essential development projects without delay.

During the previous five years the international donor community has made available an unprecedented amount of aid For the development of the West Bank and the Gaza Strip. In support of the peace process, the donor community intends to continue this effort. The next five years that are marked by additional challenges will require the continued constructive support by all parties.

To meet such challenges the parties reaffirm that economic development is a cornerstone in their mutual relations governed by the principles of mutual respect of each other's economic interests, reciprocity, equity, fairness and by facilitating the free passage of goods and people and by facilitating access to world markets with the aim of expanding Palestinian foreign trade.

With the signing of the Sharm el. Sheikh memorandum and the start of its implementation accelerated direct economic negotiations between the Government of Israel and the Palestinian Authority in the Joint Economic Committee, the forum for such negotiations, are highly encouraged.

Following is an updated understanding of the Tripartite Action Plan, approved by the Palestinian Authority (PA), the Government of Israel (GoI) and the international donor community at the AHLC meeting in Tokyo on 15 October 1999.

Implementation and concluding agreement on the following issues will be viewed as performance benchmarks by all parties.

I  -  Palestinian requirements and responsibilities

Fiscal policy

1. The P A commits itself to adhere to the revenue and expenditure targets contained in the annual budget submitted to the donor community on a timely basis and to further improve its tax administration and the expenditure management. The budget will be binding on all ministries and spending agencies, including the police force and PECDAR and available to the public. In order to achieve and ensure sustainability the P A will continue to work closely with the IMF to implement their recommendations within an agreed schedule.

2. The P A will finalise macroeconomic projections and, beginning with the 2000 budget, prepare annual budgets in a multiyear macroeconomic framework that targets full own funding of recurrent expenditures and partial, but rising own funding of development expenditures.

3. The PA and Gol will resolve the following pending issues:

(1) Israeli purchase taxes;

(2) co-operation in combating vehicle theft;

(3) dealing with unpaid Palestinian debts;

(4) the impact of Israeli standards as barriers to trade and the expansion of Al and A2 lists.

4. Within the next twelve months the p A will finalise the creation of the Government Financial Management Information System (GFMIS), including the automation of the internal audit system, the debt management unit, and the development budget and the placement of financial comptrollers within the spending ministries and departments.

5. The PA commits itself to consolidate all fiscal revenues, including external assistance committed and disbursed to p A ministries and agencies, and all fiscal expenditures under the control and authority of the Ministry of Finance (MoF) without any further delay. The annual budget should reflect all fiscal revenues and expenditures. Accounts of enterprises wholly or partly owned or controlled by the PA or its agencies must be transparent, audited and accountable to the MoF.

6. The PA will pursue prudent civil service recruitment in accordance with the Civil Service Law within the limits of the expenditure ceiling imposed by the annual budget. The overall wage bill will be consistent with fiscal sustainability. To support this the p A will carry out a comprehensive human resource planning exercise within the next eight months.

7. The GoI, the PA and the donors attach great importance to addressing, inter alia, the year 2000. donor/P A projects in Area C and the issue of industrial estates.

8. The PA will ensure all requisites required for a smooth implementation of donor financed projects, especially improving co-ordination between ministries as well as with local municipalities in planning, finalising and implementing projects ensuring them self-sustainability and reimbursing V AT payments for donor projects.

General Economic Policy

9. The PA commits itself to continue to facilitate the establishment of sound, transparent and accountable institutions that will work in a clearly defined legal environment. It will also with the assistance of the IMF and the World Bank take all necessary legal steps to establish a social security and pension scheme to cover West Bank employees and all other uncovered employees of the P A and its agencies in a unified system for the West Bank and the Gaza Strip within twelve months.

10. Any equipment, goods or materials imported for public development projects, including NGOs, financed by donors will be exempted by the p A from all customs and import taxes and duties in accordance with Annex V, Article III, paragraph 19 of the Interim Agreement. The p A commits itself to including in its 1999 budget provisions to repay outstanding VAT reimbursements to donors and UNRWA according to a time schedule to be agreed upon by the concerned parties. In this respect the GoI will further facilitate approval procedures for the import of donor goods according to transparent and clear regulations.

11. The GoI and the PA will continue to co-operate in facilitating the establishment of industrial zones in close collaboration with all parties concerned. Particular emphasis will be placed on sites in Nablus, Tulkarem and Jenin.

12. The PA and the GoI will accelerate negotiations on interim economic issues, such as the Safe Passages, and facilitate construction of the Gaza Sea Port, consistent with the Interim Agreement, the Wye River- and the Sharm el. Sheikh-Memorandums time schedule.

13. The PA commits itself to draw up within the next six months functional diagrams with clear-cut mandates of all ministries and agencies involved in economic policy.

14. The PA will continue to promote decentralisation of, and participation in, project design and implementation through enhancing the role of the municipalities and village councils and encouraging the private sector and the NGOs to participate in financing and management of public infrastructure and services.

15. The PA will expedite its efforts to develop the necessary regulatory framework for private sector promotion.

16. The PA commits itself to promote the creation of a positive climate for the private sector and for private investment, including foreign investment, particularly by further enhancing fair competition, creating a climate conducive to private enterprise and without any further delay enacting measures to simplify and encourage private sector activities and by building a legal and transparent framework to this end.

17. The PA Ministry of Finance with the assistance of the IMF will provide quarterly written reports on the budget and fiscal developments directly to the JLC through its Secretariat and the Gol will provide quarterly written reports on the transfer of revenues directly to the JLC through its Secretariat.

II -  Israeli requirements and responsibilities Policy

Fiscal policy

18. The PA and GoI will resolve the following pending issues:

(1) Israeli purchase taxes;

(2) co-operation in combating vehicle theft;

(3) dealing with unpaid Palestinian debts;

( 4) the impact of Israeli standards as barriers to trade and the expansion of A1 and A2 lists.

19. The GoI continues to commit itself, in close co-operation with the PA to carry out comprehensive, smooth and timely transfer of all revenues and accrued taxes due to the p A in accordance with the signed agreements.

20. The Gol will provide detailed information on a quarterly basis to the LACC Secretariat on all revenue transfers.

21. The Gol, in close co-operation with the donor community and the P A, will solve the pending obstacles related to facilitating the implementation of donor financed projects, including the punctual issuing and adherence of permits and the movement of diplomatic and consular drivers, senior multilateral agency staff, project experts and consultants local staff within the Task Force on Project Implementation (TFPI).

22. The Gol, the PA and the donors attach great importance to addressing, inter alia, the year.2000, donor1pA projects in Area C and the issue of industrial estates.

General Economic Policy

23. The GoI, in close consultation and co-operation with the PA, commits itself to simplify and further facilitate the procedures and the formalities at the customs points between the West Bank and Jordan and the Gaza Strip and Egypt in accordance with the signed agreements with aim of facilitating the flow of goods and the expansion of Palestinian foreign trade.

24. The GoI and the PA will continue to co-operate in facilitating the establishment of industrial zones in close collaboration with all parties concerned. Particular emphasis will be placed on sites in Nablus, Tulkarem and Jenin.

25. The PA and the GoI will accelerate negotiations on interim economic issues, such as the Safe Passages, and facilitate construction of the Gaza Sea Port, consistent with the Interim Agreement, the Wye River- and the Sharm el. Sheikh- Memorandums time schedule.

26. The GoI commits itself, consistent with the Interim Agreement, to taking all necessary steps to ensure the movement of goods and people in and out of the West Bank and the Gaza Strip. Such steps will aim at maintaining maximum Palestinian economic activity while taking security needs into account. In this regard the GoI will:

• Facilitate the movement of P A personnel, advisory and consultative personnel.

• Facilitate business people wishing to travel between the West Bank and Gaza and into Israel to swiftly obtain the necessary entry permits in a transparent manner. The GoI commits itself that these procedures will expedite the movement of business people according to demand.

• Continue to issue in co-ordination with the PA businessmen cards enabling the movement of Palestinian businessmen with their own cars.

• Facilitate the criteria for Palestinian labourers seeking to work in Israel with a view to granting permits according to market demand, including for labourers eligible for overnight passes and continuous employment programmes, while taking security needs into account.

• Ensure the rapid inspection and passage of commodities in and out of Gaza reducing necessary checks to a minimum.

• The GoI and the p A will inform all affected parties through the lACC secretariat of all procedures and measures taken and planned in this respect.

27. The GoI will facilitate the smooth transfer of responsibilities documentation for matters of land registration and building permits to the p A in accordance with the Interim Agreement.

28. The GoI and the p A acknowledge that the full implementation of trade agreements consistent with the Interim Agreement will be beneficial to the region as a whole.

III- Donor requirements and responsibilities

29. Donors will expedite their efforts to turn their pledges announced in Washington in November 1998 into specific commitments, to promptly disburse outstanding commitments, including those announced in Frankfurt in February 1999 for the year 1999, and to implement projects. In order to facilitate transparency and accountability donors will notify the PA Ministry of Planing and International Cooperation (MOPIC) of every payment made for donor financed projects. All commitments and disbursements to the PA ministries and agencies shall be reported also to the Ministry of Finance (MoF).

30. Donors will intensify their effort to assist the PA in achieving sustained economic growth, notably by taking measures to promote trade with and private sector investment in the West Bank and the Gaza Strip. In particular donors commit themselves to grant Palestinian goods preferential access to their markets and will actively seek to promote foreign direct investments in the West Bank and the Gaza Strip, including joint ventures with all interested parties.

31. Donors commit themselves to intensifying and expediting their continued efforts to co-ordinate project identification consistent with the Palestinian Development Plan and implementation according to established procedures. Donors and MOPIC will strive to plan and update on an annual basis the specific projects to be funded.

32. Donors, the World Bank, the International Monetary Fund and the United Nations reaffirm their commitment to assist the PA and the GoI with the implementation of provisions contained in this updated revitalisation of the Tripartite Action Plan and to co-ordinate their projects within the donor co-ordination mechanisms. Such commitment will be dependent on the performance of the PA and GoI and the donors.

IV   Monitoring of the TAP

33. The PA commits itself in collaboration with the IMF to prepare timely quarterly reports on revenue collection and expenditure performance and prospects as well as institution building for submission to the AHLC through the JLC. These reports will also reflect progress made on the relevant provisions of the TAP.

34. The JLC through the World Bank according to established procedures and in cooperation with the Task Force on Project Implementation will review progress in all areas addressed by the TAP, reporting to the AHLC following consultation with the JLC and the LACC.

35. The AHLC will follow-up disbursement of donor pledges and commitments following a report to be prepared by the PA.

36. The LACC will be briefed on a quarterly basis by its secretariat on issues related to revenue transfers and the flow of goods and people.

37. The PA and GoI will send representatives at a decision-making level to all meetings of the AHLC, JLC, LACC and associated task forces which have the authority to engage in substantive discussions on all issues related to the provisions of this revised TAP .

38. The GoI and the P A will on a timely basis report to the JLC on the outcome of discussion held in the JEC.

For the Ad Hoc Liaison Committee

Other Members of the International Community Welcoming the Actions Intended in this Plan Include:

The Russian Federation

The United States of America

The Presidency of the European Union

The Government of Japan

The Government o f Canada

World Bank

The International Monetary Fund

The United Nations

15 October 1999