BETHLEHEM (Ma’an) -- Palestinian Authority spokesman Ghassan Al-Khatib said Thursday the PA was formulating ideas for next year's budget in order to avert a financial crisis.

The objective is to increase local revenue and reduce expenditures without affecting health, education services or PA employees' salaries, Al-Khatib told Ma'an.

The new policies are intended to compensate for the lack of promised funds from donor countries, above all Arab states.

“During the previous three years, we were able to reduce our dependence on donor countries by 50 percent, which means reductions from $1.8 billion to $900 million this year."

New policies won't solve the financial crisis but will help reduce its impact, Al-Khatib said, noting that the PA's budget deficit stands at around $900 million with donor contributions currently totaling $390 million.

Ma'an was also told that new taxes may be introduced to boost the economy, with income taxes set to be increased from 14 percent to 16.5 percent, and taxes being introduced on land sales.

Former minister of economy Kamal Hassuneh said that the financial crisis is a very sensitive issue because it directly impacts citizens, as can be seen in Israel at the moment.

Hassuneh predicted that the ministries of health and of education would be worst affected as both ministries have a large number of employees.

He added that the solution would be a 5-year plan that ensures a place for employees in the private sector.