Truck carrying fruit leaves Kerem Shalom crossing point 390.
(photo credit: REUTERS)
The Palestinian Authority’s fiscal crisis has grown worse due to a decline in
donor funds and continued Israeli restrictions, the World Bank warned in a
report it published on Thursday.
The report was prepared in advance of a
meeting in Brussels next Wednesday of a donor forum for the Palestinian
Authority known as the Ad Hoc Liaison Committee.
“Stabilization of the
PA’s fiscal position compels immediate action by the donor community,” said
Mariam Sherman, World Bank country director for the West Bank and
Unless donor support is increased, the PA might not be able to
continue to provide basic services to its people, the report
Donor funding for the PA budget dropped by close to $1 billion in
the past four years, it said. To make up the difference, the PA has increased
its borrowing, the report said.
“In 2011 bank borrowing increased by NIS
984 million, raising total domestic debt to NIS 4.15 billion or about $1.1
billion. The PA’s local borrowing has almost reached the limit that the domestic
banking sector can sustain,” the report said.
Israeli restrictions on the
movement of goods in and out of the Gaza Strip and the West Bank continue to
make it difficult for private- sector growth to properly fuel the economy, the
In the past, Israel eased restrictions in the West Bank, but
“there have been few recent measures,” the report said. The movement of goods in
and out of the West Bank remains severely constrained, according to the
“All cargo must use a back-to-back loading system, where
shipments are downloaded from Palestinian to Israeli trucks,” said the report.
The procedure is slow and costly. It is also difficult for investors to get
visas to enter the West Bank, the report said.
“In addition, PA legal and
regulatory reforms, which had helped investor confidence in the past, have
slowed,” the report said.
While the West Bank Palestinian economy grew by
5.8% in the first three quarters of 2011, that growth was down from 7.5% in that
same period in 2010, the report said.
The Gaza economy, in contrast, grew
by 25.8% in the first three quarters of 2011, according to the report. The
double-digit growth was due in part to Israel’s easing of restrictions on