Donor funding to the Palestinian Authority fell 85% since 2008, says World Bank

Annual direct donor funding to the Palestinian Authority has dropped by $ 1 billion over the past thirteen years, according to a World Bank report released Tuesday that warned the Palestinian Authority faces a deficit of $ 1.36 billion this year. .

The Palestinian Authority’s financial situation “remains fragile due to high public spending and very low external financing,” the World Bank wrote in the document released ahead of the Ad Hoc Liaison Committee meeting in Norway on November 17. .

The group of 15 countries and international entities oversee donor funding for Palestinians, including humanitarian projects. It is also one of the few forums that brings Palestinians and Israelis together in direct dialogue.

According to the World Bank, direct donor funding to the Palestinian Authority has dropped by 85% in the past 13 years, from $ 1.2 billion. in 2008, when it was at an all-time high, at $ 184 million this year, a record low.

Donor funding fell 38% in the past year, after standing at $ 488 million. in 2020. The World Bank blamed the steep decline in 2021 on a lack of donations from Arab countries in the Gulf, a delay in financial support from the European Union, and low contributions to the World Bank’s Multi-Donor Trust Fund.

US Secretary of State Antony Blinken meets with Palestinian Authority President Mahmoud Abbas in Ramallah (credit: MAJDI MOHAMMED / POOL VIA REUTERS)

The bank called on the international community to increase its financial support for the Palestinian Authority. He warned that the continued lack of funds could affect the Palestinian Authority’s ability to combat COVID-19 and pay the salaries of public officials.

“The lack of additional funding would force the Palestinian Authority to reduce some of its medical and social expenses in response to the COVID-19 pandemic, exacerbating the health situation. It may also result in the Palestinian Authority reducing wage payments, as it has done in the past, ”explained the World Bank.

The report also spoke of the damage caused to the Palestinian Authority deficit by Israel’s policy of financially penalizing the Palestinian Authority for providing monthly stipends to terrorists in Israeli prisons and the families of Palestinians killed in the execution of terror attacks.

Israel withholds the sum of those terrorism stipends from taxes it collects on behalf of the Palestinian Authority and transfers them to its coffers.

The World Bank explained that Israel in 2021 had withheld first NIS 42 million per month, then NIS 50 million. and increased the sum to 100 million shekels. in August to offset terrorism deductions that were not withheld in 2020.

However, in a recovery move, Israel transferred a loan of NIS 500 million. to the Palestinian Authority, the World Bank explained.

It was a move that reduced the AP deficit projected for 2021 of $ 1.69 billion. to 1.36b., explained the World Bank.

“Efforts by all parties are critical to avoiding a crisis, as without additional funding, the Palestinian Authority may find it difficult to meet its recurring commitments by the end of the year,” the World Bank said.

PA’s loan “exceeded $ 2 billion. in 2020, reaching $ 2.5 billion. to August 2021 ”, explains the report.

Furthermore, the World Bank said, Israeli banks “have signaled plans to limit or terminate correspondent banking services to Palestinian banks in recent years” due to fear of money laundering and terrorist financing.

The report also highlighted Palestinian and Israeli financial reforms that could boost revenues.

The Palestinian Authority should do more to encourage private sector development through regulatory improvement and land registry reform, the World Bank said.

“Limited land registration and unclear property rights, even within Palestinian-controlled areas, are a major challenge for urban housing and commercial development,” the report stated.

Israel can help by easing restrictions on the movement and access of goods and people, the World Bank said. It can address some of the “tax leakage” problems, such as electronically linking the Israeli and Palestinian VAT system and lowering the fees it charges the Palestinian Authority, the bank explained.

Israel should also transfer to the Palestinian Authority the exit fees it collects at the Allenby Bridge into Jordan and the taxes levied on Palestinian companies in Area C of the West Bank, which it has withheld, the World Bank stated.

The bank painted a grim picture of job prospects in the Palestinian territories, noting that unemployment in the second quarter of 2021 was 16.9% in the West Bank and 44.7% in Gaza, with 59% of the population. Gaza living below the poverty line.

Still, he said, the Palestinian economy had started to recover from COVID-19 in the West Bank, with a projected growth of 6%.

He attributed this in part to the increase in work permits that Israel had provided to Palestinians for jobs in settlements or in sovereign Israel. Customs levied on raw tobacco and oil also had a positive impact on the economy.

“The current consumption-led growth in the West Bank reflects a rebound from a low base in 2020, exacerbated by the COVID-19 crisis,” said Kanthan Shankar, World Bank Country Director for the West Bank and Gaza.

However, Shankar cautioned that the Palestinian Authority economy lacks “growth drivers for sustained positive impacts on the economy and quality of life. The way forward is still uncertain and depends on coordinated actions by all parties to revitalize the economy and provide job opportunities for the young population ”.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *