World Bank warns of ten year low in donor funding to PA

“If the COVID-19 outbreak is not controlled soon, its impact on economic activity and livelihoods is going to be severe,” the World Bank said.

Palestinian Authority envoy Riyad Mansour. (photo credit: screenshot)
Palestinian Authority envoy Riyad Mansour.
(photo credit: screenshot)
Direct donor funding to the Palestinian Authority could drop to as low as $266 million this year, the lowest it has been in a decade, the World Bank warned on Monday. That figure does not include UN funding.
The World Bank issued its warning as part of a two-page report on the financial impact of COVID-19 and other measures on the financial viability of the Palestinian Authority.
“Additional spending by the PA to respond to the COVID-19 outbreak, estimated at $120 million, will strain the budget especially as donor funding is expected to reach its lowest point in more than a decade,” the World Bank said.
“If the COVID-19 outbreak is not controlled soon, its impact on economic activity and livelihoods is going to be severe,” the World Bank said.
It estimated a $1 billion deficit for the PA in 2020. The PA itself has estimated that the number could be as high as $1.4 billion. The Palestinian economy could contract by 2.5% to 7%, depending on the length of time the pandemic lasts, according to the World Bank.
It noted in particular that the Palestinians would suffer from the loss of tourist revenues as well as restrictions on freedom of movement and the ability of Palestinians to work in Israel. There are 140,000 Palestinians who work in Israel and they account for a third of the private consumption. Already, private sector representatives have announced plans to cut pay in half.
It explained that the Palestinian economy was already in crisis prior to the outbreak, with only 0.9% growth in 2019. The unemployment rate in the West Bank and Gaza was at 25% with 24% of the Palestinians living on $5.5 a day or less. Out of those, 46% were in Gaza and 9% in the West Bank. The slow down was driven by a decline in private and public consumption and in investment, the World Bank said.
The situation was also harmed by Israel’s decision in March to unilaterally deduct $12 million per month from the tax revenues it transfers to the PA. That is the sum Israel has estimated the PA pays to terrorists and their families on a monthly basis.
From March to September the PA refused to accept any tax fee transfers, but finally related. Since September Israel has transferred tax fees save for the $12 million deduction per month.


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