Contractors Union Warns: Continued Financial Crisis Threatens Collapse of Construction Companies

SadaNews - The Palestinian Contractors Union issued a statement regarding the dues of construction companies owed by the Ministry of Finance, warning that the continuation of this financial situation without urgent and serious intervention will lead to further insolvency and the forced closure of companies. It emphasized that it will initiate organized and legitimate escalation measures within legal and union frameworks in the coming period.

The union stated in its statement: "The Palestinian Contractors Union fully understands the scale of the exceptional and critical circumstances the Palestinian National Authority is going through at this stage, along with the pressing financial and economic challenges due to the general conditions, declining revenues, and accumulated obligations across various sectors."

It continued: "However, the union, from its responsible position, affirms that the irregularity of the Ministry of Finance in disbursing the dues to construction companies during the past period, and the resulting clear delays in paying financial claims for executed and duly approved projects, have inflicted significant and direct damage on national construction companies, disrupted their financial liquidity, and hindered their ability to fulfill their contractual obligations toward governmental parties, employees, suppliers, and subcontractors."

It added: "The union also points out that the sharp decline in the currency exchange rate recently has caused a real imbalance in the financial equilibrium of ongoing contracts, especially in projects whose obligations and payments are linked to the dollar or other foreign currencies or are directly affected by it. This has negatively impacted the execution costs and operational obligations of construction companies. This impact becomes even more dangerous amidst the evasion of many purchasing entities—whether in projects financed by funds and donor entities or private sector projects—from their contractual responsibilities, their non-compliance with the regulatory systems and laws, and their attempts to impose an unfair contractual reality that places the burden of market fluctuations and financial changes solely on the contractor, without adopting a balanced contract that equitably distributes risks among the parties and ensures the stability of the projects and the continuity of their execution based on clear and fair legal foundations."

The union continued: "Moreover, the union notes that the approach of some banks in dealing with construction companies in the past period—whether by tightening credit procedures, reducing facilities, raising the required guarantees, or taking collection and deduction actions without consideration of the nature of the sector’s work—has exacerbated the crisis and poses a serious pressure on the companies, threatening their financial stability and operational continuity."

It added: "The construction sector is not a marginal sector, but rather one of the pillars of the national economy, serving as a major driver of employment and investment. Any disruption to its ability to operate necessarily leads to the disruption of infrastructure projects and public services, an increase in unemployment rates, a decline in overall economic activity, and negative repercussions on the financial cycle in the Palestinian market as a whole."

The union affirmed in its statement: "Therefore, the Palestinian Contractors Union clearly emphasizes that the continuation of this financial reality without urgent and serious intervention will lead to more insolvency and forced closure of companies, weakening the sector’s capacity to fulfill its national and economic role during this sensitive phase."

It added: "In this context, the union announces to its general assembly members that it will not remain idle in the face of any negligence or neglect concerning the rights of construction companies or threatening their continuity, and it will begin in the coming period to take organized and legitimate escalation measures within legal and union frameworks to ensure the protection of contractors' rights and guarantee the regular disbursement of financial dues while addressing the banking policies that have burdened the sector."

The union confirms that it will maintain direct communication with the Ministry of Finance and all purchasing entities and will follow up on this file with the utmost seriousness and responsibility, and will keep its general assembly informed of the developments and achieved results continuously.