World Bank warns Palestinian economy

World Bank warns Palestinian economy

JERUSALEM - Agence France-Presse
World Bank warns Palestinian economy

A Palestinian man sits under a board displaying currency exchange rates. REUTERS photo

Israeli restrictions and closures coupled with the worsening fiscal situation of the Palestinian Authority is causing “lasting damage” to the competitiveness of the Palestinian economy, the World Bank warned yesterday.

In a report issued ahead of a meeting of international donors in Brussels on March 19, the World Bank explored the long-term damage to the competitiveness of the economy as a result of the worsening financial crisis facing the Ramallah-based government and the absence of peace talks, which have been stalled since late September 2010.

And it warned that the fiscal stress “could worsen in 2013.” “While urgent attention to the short-term financing shortfalls is essential, it is important to recognise that the continued existence of a system of closures and restrictions is creating lasting damage to economic competitiveness in the Palestinian Territories,” the report’s authors concluded.

“This slowdown reflects in part the absence of further easing of Israeli restrictions, the withdrawal of fiscal stimulus due to a persistent shortfall in donor aid, and uncertainty created by the PA’s fiscal challenges,” it found.

It suggested $870 million was needed for Gaza’s water and wastewater sector, $430 million for municipal services, $200 million for the electricity sector and $1 billion for the road sector, to save economy.