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Under this programme, Direct Financial Support (DFS) contributions to the payment of salaries and pensions to the civil servants and pensioners of the Palestinian Authority (PA) in the West Bank are made available on a regular and predictable basis.
Over the period 2016-2018, the EU and Member States (MSs) have contributed to nearly EUR 285 million to the CSP programme through the PEGASE DFS (PDFS) instrument.
The PA ensures the delivery of essential public services to the Palestinian population. One of its key priorities is to the uninterrupted continuation of these services, notably in the areas of health, education and social development. In the West Bank roughly two thirds of the civil servants work in the education and health sectors, most of which as teachers, doctors and nurses. This component provides support aimed to safeguard the continuation of essential services in a context of declining budget support which risks having a negative impact on the macro-fiscal outlook.
At the same time since 2018 part of the CSP disbursement (EUR 20 million out of EUR 85 million) has been conditioned to the fulfilment of certain reform objectives established in the context of the PA's own strategy of Public Financial Management (PFM). Accordingly, while providing direct financial support to the PA this component simultaneously promotes sound and efficient PFM.
Regular and predictable contributions are made available via payments into the PA's Single Treasury Account on the basis of a Memorandum of Understanding signed with the PA's Ministry of Finance and Planning and a payment schedule annexed to each Financing Agreement.
The EU contributions are in accordance with agreed eligibility criteria. The number of beneficiaries eligible is in the order of about 56,000. The disbursement of funds is fully co-ordinated with the monthly payment of PA salaries/pensions, thus allowing all civil servants and pensioners to receive a single payment, regardless of the source of funds (PEGASE DFS, MoFP or both).
In December 2013, the European Court of Auditors (ECA) published a report on PEGASE DFS where it recognised that the European External Action Service and the Commission had succeeded in implementing direct financial support to the Palestinian Authority in difficult circumstances. The report concluded that the control measures put in place are 'robust'. Successive external evaluations concurred with such assessment, with the latest evaluation for the period 2016-17 finding PDFS 'much appreciated by the PA, the EU and DPs [Development Partners] as a robust, trusted, effective & efficient assistance delivery tool'.
Advanced monitoring, control and audit systems are set up for the CSP programme (as with all other PEGASE DFS programmes). These systems ensure the efficient and effective provision of support to Palestinians, while protecting the interests of donors participating in PEGASE DFS by ensuring that funds are disbursed with full transparency and accountability and in compliance with the relevant agreements between the EU and the PA, therefore protecting the beneficiaries by ensuring a full transparent system is in place. The system also avails itself of a system to screen beneficiaries against international and ad hoc sanctions lists, covering inter alia over twenty different risk categories, including money laundering, terrorism financing, varieties of financial fraud, human, arms, drug and weapons proliferation, as well as Politically Exposed Persons (PEP) and their close associates.
An audit team is in charge of identifying the eligible beneficiaries on the basis of the eligibility criteria. An ex-ante agreed upon procedure audit report is produced by the audit team prior to each payment. An ex-post audit report is also produced by a different auditor following each payment. In addition, PEGASE DFS contributions make the object of an annual Financial Audit.