EUROPEAN UNION
Mécanisme "Palestino-Européen de Gestion et d'Aide Socio-économique" (PEGASE)
PEGASE programmes of Direct Financial Support to the
recurrent costs of the Palestinian Authority
What is it?
PEGASE is the European programme launched
on February 1rst, 2008 by the European
Commission (EC) to help build the institutions of
the future independent Palestinian State.
"In order for the PA to sustain the reform momentum and its achievements in
institution-building, remaining Israeli restrictions must be lifted. The resulting
revival of the private sector can be expected to grow the tax base and gradually
reduce dependence on external assistance. Until then, however, the West Bank and
Gaza will remain vulnerable to reductions in aid flow."
This programme aims to shift from emergency
assistance to a sustainable Palestinian
WB Report to the Ad-Hoc Liaison Committee, 18 September 2011
development process, through support in four
key sectors: Governance; Social Development;
Economic and Private Sector Development; and Public Infrastructure Development. It is aligned with Palestinian national
agenda defined in the Palestinian Reform and Development Plan 2008-2010 and the Palestinian National Plan 2011-2013.
In this framework, the PEGASE Direct Financial Support (DFS) mechanism channel significant amounts of support from
the European Union (EU) and donors to the Palestinian Authority (PA) in order to support sustained delivery of basic
public services in the West Bank and Gaza. Funds go towards:

salaries of PA civil servants and pensioners, to ensure that essential public services, such as schools and
hospitals, keep operating;

social allowances to the Palestinian households living in extreme poverty, in support to the Ministry of Social
Affairs’ cash transfer programme;

settling of PA arrears to private sector businesses, to reduce the PA debt to the private sector and address one
of the major causes of the crisis of the private sector – and, at large, the Palestinian economy;

Until end 2010, fuel to run the Gaza power plant, to ensure that people in Gaza have electricity – as well as
technical assistance to monitor and audit the fuel delivery process, and maintain the fuel database. This
programme was replaced by an energy sector reform project.
Besides, the EU is supporting through PEGASE DFS system a number of initiatives in support to the private sector in both
Gaza and the West Bank, notably to businesses destroyed or damaged during Israel's Operation "Cast Lead".
Through these programmes, the EU and the PA have a direct and immediate impact on the well-being of the Palestinian
population, as well as on the capacity of the PA to continue to provide essential public services to its citizens.
Advanced monitoring, control and audit systems are set-up for all programmes, to ensure that funds are disbursed
with full transparency and accountability to targeted beneficiaries.
State of play of EU and donors' contributions as of 31 January 2012 (in € million)
Civil servants and pensioners
(CSP)
2008
2009
2010
2011
2012
Austria
Vulnerable Palestinian Families
(VPF)
Arrears to the private sector
2008 2009 2010 2011 2012 2008 2009 2010 2011 2008 2009 2010 2011 2012
1
0.5
1.5
Private Sector
Reconstruction
in Gaza (PSRG)
2010
9
3
2
1
1
Germany
20
25
20.3
Greece
0.5
Hungary
0.2
Ireland
1.5
1.5
0.5
1
1.5
Italy
20
1
0.5
1.5
7
4.8d
Japan
Luxembourg
Malta
Netherlands
Slovenia
Spain
Sweden
2011
1
Belgium
Finland
Fuel to Gaza
(SEPS)
0.5
0.5
0.5
0.5
0.15
19.85a
8.92b
5.07b
0.15
20
25
30
20
10.62
4.6
5.2
6.6
3
Switzerland
1.9
UK
20.8
EU
159
150.5
171.4
116
121.2
16 28.47
38
2
29
1.33
10
67 39.63
10
22
TOTAL
2008
2009
2010
2011
1
0.5
1.5
9
0
0
3
2
0
20
25
20.3
0
2012
1
2
0
0.5
0.2
0
0
0
3
3
1.5
1.5
20
0
7
0
0
0
0
4.8
0.5
0.5
0.5
0.5
0.15
0
0
0
19.85
8.92
5.07
0
0.15
0
0
0
23
25
30
20
10.62
4.6
5.2
6.6
0
1.33
1.9
2
20.8
0
0
0
252
218.6
231.4
145
131.2
Sub-total
235.7 193.0 212.6 145.1 121.2c
37 30.4 49.4 33.5
10 97.5 65.9 20.3
0
13 0.5
0
0
22
4.8 383.27 289.95 304.37 183.4 131.2

TOTAL
907.76
160.37
183.76
13.50
26.8
1,292.19
(a) The amounts include €6 million for the payment of salaries to the Civil Police/Defence of the PA, executed on 17/02/2009
(b) Earmarked for the payment of salaries to the Civil Police/Defence of the PA
(c) The amount includes €26.2 million for the payment of December 2011 PA salaries/pensions, executed on 05/01/2012
(d) The Japanese Government contributed US$6.58 million to the PSRG programme. An additional Japanese US$2 million contribution, which are also to be channelled through the PEGASE
DFS mechanism, will be used to support the tenants of the Jericho Agro-Industrial Park
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 1/8
Civil Servants and Pensioners (CSP)
The Context:
Supporting the creation of a Palestinian State implies the creation of a functioning administration able to provide public
services. As recurrent expenditures represent above 90% of the PA's expenditures, with a large "financing gap",
intervention by the donor community is required to keep the public services functioning.
Impact of current PEGASE DFS support
 From 2008 to present PEGASE DFS has been contributing to the wage bill paid by the Ministry of Finance to PA
employees. During the period 2008 to 2011, the EU’s contributions represented 20.5% of the total wage bill of PA
employees and 32% of the civilian wage bill.
 In 2011, the EU’s monthly contributions to the PA averaged €11.2 million, representing almost 11.1% of the total
wage bill of PA employees and 17.6% of the civilian wage bill.
 This support directly benefits 74,300 active civil servants (equivalent to 81% of total active civil servants), such as
teachers and doctors, who provide key public services to the overall population throughout the occupied Palestinian
territories. Around 10,250 pensioners, paid directly under PA budget, are also eligible to and benefit from this
support.
 As of 31 January 2012, around €837 million have been disbursed in the framework of the CSP programme.
 34% of the total funds disbursed have been paid to civil servants/pensioners eligible under PEGASE who live in Gaza.
The objective(s):
To help the PA (i) meet its financial obligations towards civil employees and pensioners and (ii) ensure the continuous
delivery of basic public services (health, education, social affairs, etc).
The PA annual needs:
Total financing needs to cover the totality of the PA yearly civilian wage bill are estimated at over €704 million (based on
the 2011 wage bill). This corresponds to an estimated average of €58.7 million per month.
Financing mechanism(s):
 Systematic audit and verification of the payroll
 Systematic identification of final eligible beneficiaries
 Payment system 1 is available for this programme (see overview of payment systems)
Some useful data:
PA Wage Bill - Global Figures
Per year
(in € million )
Per month
(in € million )
1,116.2
93.0.1
PA civil wage salaries and pensions
704.1
58.7
Civil/Total (%)
63%
63%
Category
PA total salaries & pensions
In 2011, the EU started exploring the possibility of
linking the systematic contributions to the payment
of salaries/pensions with policy dialogue and reform
processes in the public administration sector.
Security
Forces
Contacts and discussions have been
initiated with
42,000
the General Personnel Council, with a view to
supporting the PA implement and achieve the
national strategic objectives to modernise and
streamline public administration to ensure that
public services work with the maximum efficiency to
deliver high quality services to the people of the
West Bank and Gaza Strip.
PA Employees Civil Servants - Breakdown by Category
All other civil
servants and
pensioners
(45%)
The PA Civil Service Reform
Heath sector
workers
(12% )
Education
sector
workers
(43% )
The identification of potential niches of intervention
in the area of civil service reform will be determined
shortly.
Civil Servants and Pensioners Eligible under PEGASE
Category
Total on
payroll
Eligible under
PEGASE
Eligible under
PEGASE/Total on
payroll
Civil Servants
91,690
74,329
81%
Pensioners*
12,191
10,252
84%
Total CSP
103,881
84,581
81%
NB. N.B When not otherwise indicated, the data above refers to salaries and pensions
paid in the year 2011 or to the December 2011 CSP. The number of PA employees
and pensioners is by definition moving every month following departures,
recruitments etc. Each monthly movement and change in number and categories
of civil servants included in the PEGASE contribution is systematically checked and
audited. Figures are rounded to the nearest hundredth.
* Paid under PA budget
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 2/8
Vulnerable Palestinian Families (VPF)
The Context:
The PA difficult socio-economic situation (including the absence of effective social insurance schemes such as universal
retirement and unemployment benefits) puts increased burden on social assistance. EU support aims at promoting PA
policies and actions that enhance the capacity of the poor and vulnerable to escape from poverty and better manage risks
and shocks, and provide higher level of social security (heath, pension, unemployment) throughout the life cycle.
Within PEGASE, the EU intervenes along the following two complementary axis in support to the social protections sector:
 direct financial support to households living in extreme poverty who depend on financial aid from the PA (PEGASE
programme of support to VPF);
 technical assistance to upgrade and strengthen capacity at institutional and policy levels to meet international
standards and best practices in the area of social policy and poverty reduction.
The PEGASE programme of support to "Vulnerable Palestinian Families" (VPF):
The objective(s)

To improve the well-being of poor and vulnerable populations by supporting the PA in
providing regular and predictable cash assistance to Palestinian households living
in extreme poverty in the West Bank and Gaza.
Extreme poverty is defined as living on
less than USD 2.25 per day, per capita.
Households or individuals below this level
of consumption are considered unable to
meet basic needs such as food, housing
and clothing.
The impact

Payments of social allowances are made on a quarterly basis to beneficiaries registered as extremely poor under the PA
Ministry of Social Affairs’ Cash Transfer Programme (CTP).

As of 31 January 2012, over €152.5 million have been disbursed in the framework of the VPF programme, including
contributions from Italy, Switzerland, Ireland, Austria and Finland.
The cost

The estimated annual cost to cover expenditures for a targeted caseload of approximately 75,500 households living in
extreme poverty in the West Bank and Gaza is over €68 million (i.e. over €17 million per quarterly payment, at EUR/ILS
exchange rate of 5 and excluding administrative costs).

The EU and the World Bank are the main contributors to the CTP, with a yearly contribution of €40 million and USD10
million, respectively. Since December 2010, the PA has been contributing increased amounts of funds from its national
budget to cover the cost of its cash assistance programme (30 to 35% of the total cost).
The financial mechanism

Systematic audit and verification of the PA Ministry of Social Affairs cash assistance beneficiaries

Payment made through a network of local bank branches in the West Bank and Gaza

Payment system 1 and 2 are available for this programme (see overview of payment systems

Systematic field monitoring of payment execution and ex-post audit
The PA Cash Transfer Programme
In April 2010, the PA Ministry of Social affairs introduced the reformed Cash Transfer Programme (CTP), developed in the framework of the Palestinian National
Programme for Social Protection. The CTP builds on poverty-based targeting modalities - derived from the application of objective “proxy means testing” - to
identify and provide assistance to households living in extreme poverty. This reform was supported by the EU and the World Bank and was implemented in the West
Bank in June 2010.
The full integration of Gaza into the CTP – a process strongly facilitated by the EU – came into effect in December 2011.
A total of over 75,500 households living in extreme poverty are presently enrolled to receive cash assistance under the unified CTP. Beneficiaries in Gaza represent
over almost 60% of the caseload.
The unification of targeting modalities and outreach in the West Bank and Gaza, as well as the solidification of an integrated database provides a comprehensive
national tool through which poverty ranking of households can be granted, and which can be used to target various types of social assistance and services.
Promoted and supported by the EU, the processes of opening bank accounts for CTP beneficiaries and centralising payments at the level of the PA Ministry of
Finance have been instrumental in improving the quality of beneficiaries' information, as well as facilitating the cross-check of data with households receiving other
forms of PA payments/salaries (i.e. prisoners' aid, martyrs' aid, public employees with government salaries). To ensure transparency and fairness throughout the
targeting and enrolment processes, the PA MoSA is in the continuous process of developing upgraded mechanisms of verification/control and outreach to
address inclusion and exclusion errors.
Complementary EU support to PA institutional building:
 Alongside the VPF programme, the EU is supporting the PA Ministry of Social Affairs to upgrade and strengthen its
capacity at institutional and policy levels to meet international standards and best practices in the area of social
policy and poverty reduction.
 The capacity building programme envisaged as part of this EU-funded Technical Assistance package is designed to
support the implementation of the national Social Protection Sector Strategy produced in the frame of the Palestinian
National Plan 2011-2013, which builds around four key objectives: 1) reduction of poverty among the Palestinian
population; 2) strengthening the protection, care and empowerment of the vulnerable and marginalised groups; 3)
strengthening and expansion of a system of social security which encompasses social insurance schemes (pensions,
unemployment, health insurance) and 4) development of the regulatory environment, institutional basis and
relations of partnerships necessary for the operation of a modern system of social protection.
 Identification of EU interventions in the area of social protection, with a medium to long term perspective (20122015), is ongoing.
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 3/8
Support to Essential Public Services: Provision of fuel to the Gaza Power
Generating Company (SEPS)
The Context:
Ensuring the continued provision of essential services, including electricity, to 1.5 million Palestinians in Gaza in line with
the priorities of the PA from mid-2006 until end of 2010.
Impact of PEGASE support
 As of 31 December 2010, over €196.8 million were disbursed to provide fuel to the Gaza Power Generating Company
(GPGC).
 PEGASE also supported the delivery of fuel to the Gaza Power Generating Company through the provision of technical
assistance in order to: i) audit and monitor fuel deliveries covered by donor contributions through PEGASE-SEPS and ii)
assist the PA in improving the fuel delivery mechanism to ensure, systematic, controlled and cost effective provision of
fuel to the Gaza Power Plant. A limited delivery of fuel to the Gaza Power Generating Company of Litre 1.7 million per
week generates approximately 18% of power distributed in the Gaza Strip (30MW). The remaining electricity is bought
from Israel (72%) and Egypt (10%).
Suspension of programme
As of 7 January 2011, the Gaza Power Generating Company received fuel deliveries via informal channels, which has
prompted the suspension of the programme and be replaced by the EU institutional development project in the Electricity
sector.
Institutional Development and Electricity Sector Reform
Aiming at greater sustainability, the fuel delivery programme has been replaced by a fruitful policy and strategic dialogue with the PA Ministry of
Finance (MoF) and the Palestinian Energy and Natural Resources Authority (PENRA) to provide a solid capacity building component to the PA energy
sector with a view of reorganising the institutional, financial and regulatory set up so as to reducing the expenditures linked to net lending in electricity.
The capacity building component is being provided through the implementation of the EU funded "Institutional Development and Electricity Sector
Reform" project which aims to support the PA’s efforts in reducing the net lending through:
 reorganising the Regulatory Structure of the Palestinian electricity sector in order to increase its overall capacity;
 reinforcing the distribution of the electricity sector in order to inter alia increase collection rates;
 increasing the Power Generation of the sector via the design of a Power generation Master Plan;
 reorganising the power transmission through the development and implementation of the future Palestine Energy Transmission Company Ltd.
(PETL);

supporting the Palestinian electricity sector management and all stakeholders during change process.
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 4/8
Private Sector Reconstruction in Gaza (PSRG)
The Context:
 The PA established the PSRG programme in the aftermath of Israel's "Operation Cast Lead" in 2009 to provide financial
support businesses that were destroyed or damaged during the Operation.
 The PSRG targets businesses that need to restore any destroyed/damaged assets necessary for the operation of their
business. Funded items include machinery, office furniture and equipment, as well as building and business premise
material.
 Out of a total population of 1,185 claims received originally from the PA database, 915 claims have been found to be
eligible by the EC auditors according both PA and EC eligibility criteria.
Impact of current PEGASE support
 The EU committed €22.0 million to support the implementation of PSRG at the end of 2009.
 In March 2011, the Japanese Government committed €4.8m to PSRG - this contribution is also channelled through the
PEGASE DFS mechanism.
 The PSRG's budget is already covered with the EU, Japanese and PA contributions and requires no for further funds.
 The 915 eligible PSRG claimants represent businesses of all sizes and of almost all sectors of activity (excluding
agriculture, which is not covered by PSRG).
The Objective(s):
To help enterprises resuming their activities in order to revitalize the economic activity in the Gaza Strip and to provide
for sustainable livelihoods for its people.
State of Play:
 As of 31 January 2012, c. €19.6m (c. USD26.3m) had been disbursed under the programme - this represents around
70% of the total budget. There have been eight batches of payments under the programme (July and September 2010;
January, June, August, September and December 2011; January 2012), which have benefited virtually all eligible
beneficiaries (913 out of 915).
 Further payments are expected to take place under the PSRG programme in 2012.
 A sophisticated system of verification has been developed by the EC to ensure that funds received under PSRG by
eligible claimants are actually used to restore damaged/destroyed assets in order to restart their economic activity. The
complex verification process by EC contractors/auditors regarding the use of funds received is ongoing.
 The specific needs of the private sector in Gaza, which has been devastated by the aforementioned Operation and the
continuous Israeli siege, continue to be one of the priorities in the area of private sector development. In consultation
with all relevant stakeholders, the EU assessed the possibility of expanding PSRG to other businesses in Gaza that had
not benefited from it and concluded that such an expansion should focus on the agricultural sector. It was noted that a
significant part of Gaza's agricultural sector has been seriously damaged by Israeli actions, notably Operation Cast
Lead, but has not received any significant support. The EU is currently working with the PA's Ministry of Agriculture to
set up this expansion, which will take the form of a new programme.
 Besides, the EU has assessed the option of establishing PSRG-inspired initiatives outside the Gaza Strip. In this context
and in coordination with all relevant stakeholders, it has concluded that it should set up a PSRG-inspired programme to
support financially farmers and agri-businesses of the West Bank that have been victims of the activity of IDF and
Israeli settlers, notably in Area C. Such an initiative would contribute to stop the abandonment by Palestinian farmers
of agricultural land by supporting them financially to develop their land. The EU is currently working with the Ministry of
Agriculture in order to prepare for the first phase of this new programme, which should start with a pilot focusing on
two or three geographical areas heavily affected by Israeli activity.
Financial mechanism(s):
 Systematic audit and verification of payments to private sector enterprises.
 Systematic audit and verification of claims.
 Payment system 1 is available for this programme.
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 5/8
Private sector arrears
The Context:
The PA seeks to develop a market economy led by the private sector: PEGASE supported the creation of a proper
environment for Palestinian businesses. to flourish
Impact of current PEGASE support
 Since the beginning of 2008, PEGASE provided direct support to almost 650 businesses in occupied Palestinian territory,
out of which around 40% are in the Gaza Strip and 60% in the West Bank. This contribution results in a rapid injection
of funds into the economy, which provides relief to Palestinian businesses and raise their purchasing power. It further
secures the employment of thousands of Palestinian workers and, consequently ensures that the provision of services
to the administration can continue. Finally, it also improves the Ministry of Finance cash flow and, indirectly, the
financial exposure of banks.
 As of 31 January 2012, over €27 million were paid to support for the payment of arrears to the private sector.
The Objective(s):
To help reduce the stock of unpaid bills accumulated by the PA towards private sector businesses and paid by the Ministry
of Finance.
The PA's needs:
Latest available figures point to an accumulation of arrears to up to ILS 1.5 billion – out of which ILS 600 million for the
private sector.
The Financial mechanism(s)
 Systematic audit and verification of the arrears invoices provided by the Ministry of Finance
 Systematic certification to verify eligibility of invoices
 Payment system 1 is available for this programme (see overview of payment systems)
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 6/8
PEGASE DFS: How does it work?
PEGASE payment system overview
Beneficiaries' lists from PA
Ministry of Finance (civil
servants/pensioners, recipient of
social allowances)
Donors'
contribution
(Memorandum of
Understanding)
 Ex-ante controls and verifications by EU auditor
 Application of EU eligibility criteria
EU and donor's funds
available in dedicated
sub-account of the PA
Single Treasury Account
Cross-check of
data with other
PEGASE
programmes
World Check
(International
sanctions list)
Final list of payees
(eligible PEGASE
beneficiaries)
Letter to the PA Ministry of
Finance to authorise the
release of the EU/donors
contribution on the basis of the
list of eligible PEGASE
beneficiaries
Payment to
PEGASE eligible
beneficiaries
Ex-post audits and
on-the -spot controls
The Legal and contractual framework
The legal and contractual framework applicable to contributions of all Donors is as follows:

The Donor signs with the PA, represented by the Prime Minister or the Ministry of Finance, a specific legal
agreement (e.g. Financing Agreement) or standard Memorandum of Understanding, detailing the implementing
modalities of the contribution (including the purpose of the contribution, conditions of payment, reporting,
monitoring of actions, evaluations, audits and controls, etc. are detailed);

The Donor signs in parallel a standard Memorandum of Understanding with the EC defining the tasks entrusted
to the Commission (including the objective of the contribution, conditions of payment, reporting, monitoring of
actions, evaluations, audits and controls, etc.)

Models of standard Memoranda of Understanding are available at the EC (see Contacts below).
Payment systems
PEGASE operates with three main systems for the disbursement of funds – all ensuring that the support to Palestinians
is provided efficiently and effectively, and that funds are disbursed with full transparency and accountability. In
accordance with aid effectiveness principles, these systems also allow the PA to integrate external financing into its
budget and accounts.

Payment system 1) Direct payment to a specific sub-account of the Single Treasury Account of the PA
Under this payment system, contributions are credited in a sub-account of the PA Single Treasury Account (STA)
exclusively opened for contributions to a specific PEGASE programme. The STA is the PA-official public account
opened and managed by the PA Ministry of Finance. Three different cases for the authorisation of payments from
STA sub-account to beneficiaries can be distinguished, depending on the number and nature of the Donors:

Pooled EC and donors: when contributions from donors and the EC are pooled together in a sub-account of
the STA, direct payments from this sub-account to the beneficiaries concerned are authorised by the PA upon
receipt of an ex-ante authorisation letter by the EC, acting as an intermediary on behalf of all donors via this
sub-account.

Single donor: when a single donor has decided to earmark its contribution in a specific sub-account of the
STA, direct payments from this sub-account to the beneficiaries concerned are authorised by the PA upon
receipt of an ex-ante authorisation letter by the donor concerned.

Pooled donors: when contributions from donors (without participation of EC funds) are pooled together in a
sub-account of the STA, direct payments from this sub-account to the beneficiaries concerned are authorised
by the PA upon receipt of an ex-ante authorisation letter by a leading donor, acting as an intermediary on
behalf of all donors via this sub-account.

In all three cases, ex-ante and ex-post controls and audits are systematically carried-out.

Payment system 2) Direct payments to providers
Under this system, and on the basis of relevant agreements, payments are made available in the validated bank
account indicated by the providers - in accordance with the payment schedule set out in the relevant
agreement(s). This system is particularly relevant for the PEGASE programme of payment of PA arrears to the
private sector.

Payment system 3) Assigned revenues
In line with the Paris Declaration on Donor Harmonisation, the EC is able to receive contributions from Member
States for specific country projects and programmes (ENPI Regulation, Art.17). These contributions are governed
by the relevant EC procedures, including the Commission Decision procedures as well as the Financial Regulation,
Guides and Rules concerning, procurement, contracts, financial management, monitoring, and audit. The donor
providing funds does so through the signature of a Transfer Agreement, with funds being transferred into the EC
budget (ENPI Palestine budget line). Funds are managed by the EC.
Monitoring, control and audit systems
Advanced monitoring, control and audit systems are set up for all PEGASE programmes. These systems ensure the
efficient and effective provision of support to Palestinians, while protecting the interests of donors participating in
PEGASE by ensuring that funds are disbursed with full transparency and accountability and in compliance with the
relevant agreements between the EC and the PA.
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 7/8


Description of monitoring, control and audit systems:

High standards of control are achieved through a system of audit and monitoring verifications.

To ensure high standards of verification of individual recipients of funds, as well as to avert any risk of misuse
of funds, all direct beneficiaries of PEGASE funds under all the various scenarios detailed below are screened
against international sanctions lists and other ad-hoc lists ("World Check" software).

All PEGASE DFS programmes are implemented under the continuous overview of an independent team of
auditors. The team of auditors is in charge of identifying PEGASE eligible populations on the basis of
eligibility criteria defined by EC in the relevant agreed-upon procedures plan (ex-ante audit).

Ex-post audits are systematically performed to confirm that disbursements were properly executed.
Financial audits of the PEGASE DFS activities implemented during the periods 1 February 2008 to 31 July 2009 and 1
August 2009 to 31 December 2010 were carried-out by independent auditors. Results are fully satisfactory. Annual audits
covering all activities implemented under the PEGASE DFS mechanism are undertaken on an annual basis.
EU eligibility criteria*:
PEGASE programme of support to Civil
Servants and Pensioners
(PA salaries/pensions)
PEGASE programme of support to Vulnerable
Palestinian Families
(social allowances)
PEGASE programme to support the settling of
PA arrears to the private sector
PA employees with the following positions and
statutes are ineligible to receive PEGASE DFS
contributions under the CSP programme:
 Ministers and Deputy Ministers, including their
assistants and legal advisors;
 Workers identified as "daily paid" employees;
 Employees/pensioners of the security forces
and the civil police;
 Employees who work at non-governmental
organizations supported by the PA, labour
and trade unions supported by the PA, and
various political parties supported by the PA;
 Exclusion from the international and ad-hoc
sanction lists.
Households registered in the PA Ministry of Social
Affairs' Cash Transfer Programme (CTP) are eligible
to receive PEGASE DFS contributions under the VPF
programme if:
 they are eligible to receive cash assistance at the
cut-off date of the applicable CTP database (i.e.
beneficiaries registered to receive exclusively the
following type of assistance are ineligible: medical
insurance, food assistance, referral to institutions,
care, youth, shelter or other);
 they have been identified as "extremely poor" as
per the application of proxy-means testing;
 they are entitled to receive a monthly benefit of min
ILS 250 and max ILS 600;
 they have a valid, complete and correct bank
account through which the payment of the
allowances can be made, for West Bank
beneficiaries;
 they do not receive direct payments under other
PEGASE schemes (i.e. CSP).
To be eligible, arrears to the private sector must
fulfil the following criteria:
 They must be outstanding for more than 45 days
from the invoice date, have been approved by
the PA MoF in accordance with its internal
procedures, and are still not paid;
 Where applicable, the legal status of the
beneficiary is in compliance with all legal
requirements of the PA regulations for private
sector.
 Claims must be accompanied by all the
necessary supporting documents.
 They must not have been already covered by
other EC payments under other programmes.
 The beneficiaries and/or their representatives
must not appear on any list of
companies/individuals that have been engaged
in illegal or terrorist activities.
 They must not be related to goods supplied or
services provided for the direct or indirect benefit
of the PA security and military services.
* Eligibility
* criteria of each PEGASE programme are defined in the relevant agreed-upon procedures/audit plan.

Evaluation of PEGASE:

An independent, mid-term, external evaluation of PEGASE programmes took place during the second half of
2009. It provides participating donors with an independent assessment of the mechanism.

The final evaluation covering the period February 2008 to February 2011 is ongoing.
Information and communication
The EC Press and Information team in Jerusalem provide the following services:

work closely with the press and information services of the PA to ensure a strategic joint approach to press and
public information about PEGASE;

co-ordinate with offices of contributing donors to ensure appropriate publicity and visibility on the signature of
Memoranda of Understanding, at the launch of donor-financed operations and at other programme milestones;

issue press releases (in English and Arabic) to the international and Palestinian press on all aspects of PEGASE
operations – ensuring that all contributing donors are named and their flags and/or logos displayed;

Manage the publication and dissemination in Jerusalem and Brussels of those reports on PEGASE operations, which
are made public and can make these materials available for dissemination by contributing donors in their capitals.
Contacts
In Jerusalem :
Office of the European Union Representative
Tel: + 972 (02) 541-588
In Brussels :
European Commission
DEVCO F3 - Tel: + 32 2 296 6347 (secretariat)
The Acting Representative
Mr John-Gatt Rutter
[email protected]
Mediterranean and Middle-East Unit
Head of Unit
Mr Andrew Jacobs
[email protected]
Head of Operations
Mr Sergio Piccolo
[email protected]
Head of the PEGASE DFS programmes
Ms Elisabeth Rousset
[email protected]
International aid/Cooperation officer
Mr Michael Docherty
[email protected]
FEBRUARY 2012 - PEGASE programmes of support to the recurrent costs of the PA – Page 8/8