Gaza's Hamas government is unable to pay its 32,000 employees in full for the second straight month, an official said Sunday, signaling the Islamic militants are facing a cash crunch.
"We are having difficulties in getting the money in (to Gaza) because of the siege, and this will not last long," Mahfouz said in comments posted on the website of Gaza's Finance Ministry. "The government has its own reserves, and it can make them available, but it needs a way of getting them."
Hamas is believed to get funding from Iran and other foreign supporters; the cash brought in through smuggling tunnels under the Gaza-Egypt border. In recent months, Egypt has clamped down on the smuggling, building an underground steel wall, blowing up tunnel shafts on Egyptian soil and confiscating contraband.
Gaza's banks refuse to do business with Hamas, for fear of running afoul of international anti-money laundering regulations and losing business abroad. The Palestine Monetary Authority, run by Western-backed Hamas rivals in the West Bank, says it has erected a firewall between Hamas and Gaza's bank branches.
Mahfouz confirmed Sunday that April salaries will not be paid in full. He said that all of the 32,000 civil servants and members of the security forces will get a minimum payment of $400, but that those who normally make more will receive partial payments. A midlevel civil servant earns about $700 a month, and a top earner makes about $1,100.
In March, government employees were also not paid in full.
In parallel with the cash crunch, Hamas also launched an unpopular tax drive to raise revenue. In mid-April, it started imposing a steep tax on cigarettes, raising the price of a pack of Marlboros from $2.15 to $2.95, prompting a flurry of complaints from smokers in the impoverished territory. Despite the grumbling, Hamas remains firmly in control of Gaza.