External Accounts . As mentioned above, labor mobility improved during 1998 relative to 1997. A rise in the volume of imports is even more striking in view of the depreciated shekel which makes imports more expensive. Fiscal Accounts . In addition, for the first time since its inception, the PA financed total current expenditure using its own resources, independent of donor support.
Donors continue to finance the entire capital budget.
The public sector wage bill represents a large share of the budget, and continued public sector hiring beyond the 1998 budgeted targets led to additional fiscal pressure. On the other hand, tax revenue and clearances exceeded expectations, offsetting the higher than anticipated spending. The fiscal outlook for 1999 is mixed. The Ministry of Finance continues to face liquidity constraints. Moreover, the re-grading exercise outlined in the Civil Service Law will also increase the wage bill.