Palestinian economy facing
fiscal, pensions crisis: World Bank
Send a link to a friend
[September 15, 2016]
By Luke Baker
JERUSALEM (Reuters) - Foreign support
to the Palestinian Authority has fallen by nearly 50 percent in the
past three years, leaving the budget under severe strain and the
pensions system close to collapse, the World Bank said on Thursday.
While the Palestinian Authority, overseen by President Mahmoud Abbas,
has done well to reduce the deficit over the past decade, cutting it
by 15 percentage points to 10 percent of GDP, external financial
support has fallen even faster.
In 2013, foreign donors -- mainly the European Union and the United
States -- provided direct budget assistance worth nearly $1.3
billion. This year, that figure is expected to be less than $700
million, leaving a large financing gap.
"The Palestinian economic outlook is worrying with serious
consequences on income, opportunity and well-being," said Marina
Wes, World Bank country director for the West Bank and Gaza.
"Not only will it affect the Palestinian Authority's capacity to
deliver services to its citizens, it may also lead to wider economic
problems and instability."
![](http://archives.lincolndailynews.com/2016/Sep/15/images/ads/current/cca_laptop-sda021709.png)
Overall, the Palestinian economy is expected to grow at around 3.5
percent in the coming years. But the outlook is starkly different
between the West Bank, where the Palestinian Authority is based, and
Gaza, the blockaded coastal strip that has been run by the Islamist
group Hamas since 2007.
Unemployment in Gaza stands at 42 percent and the territory is
struggling to rebuild after a month-long war with Israel in 2014.
Many international aid pledges have not been met.
By contrast, West Bank unemployment stands at 18 percent and the
Palestinian Authority is doing a better job of managing spending and
generating extra revenue from fees and taxes.
Yet the critical problem remains the financing gap. The Palestinian
Authority is close to the borrowing limit from domestic banks set by
the central bank and may have to resort to running into arrears with
the pension fund and private suppliers to fill the gap, the World
Bank said.
[to top of second column] |
![](../images/091516pics/busine15.jpg)
Palestinians shop in a market ahead of the Eid al-Fitr holiday
marking the end of Ramadan, in the central Gaza Strip July 4, 2016.
REUTERS/Ibraheem Abu Mustafa
![](../images/ads/current/demay_inv-lda081412.png)
"The stock of arrears to the pension system is estimated at $1.6 billion -- and
it threatens the viability of the overall pension system," it said in its latest
monitoring report.
"Arrears to the private sector currently stand at $590 million, which heavily
weighs on the private sector's ability to operate normally and is damaging for
the economy."
The World Bank said the only way to avoid wider economic problems for the 4.8
million Palestinians living in the West Bank and Gaza was for foreign donors to
reverse the fall in support.
It also called on the Israeli government, which collects many taxes and fees on
the Palestinians' behalf, to explore ways of reducing the fiscal loss and
reverting more of the revenue to the Palestinian Authority.
(Writing by Luke Baker; Editing by Dominic Evans)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2016/Sep/15/images/ads/current/graue_16_colorado_091216.png)
![](http://archives.lincolndailynews.com/2016/Sep/15/images/ads/current/ldn_medical_directory_small2.png) |