World Bank says Palestinian economic prospect worrisome

A World Bank (WB) report has warned that the finances of the Palestinian National Authority (PNA) remain fragile and that the year's financial gap may amount to 600 million U.S. dollars.

"The PNA's finances remain fragile with declining budget support leading to a projected financing gap of about 600 million U.S. dollars in 2016," said the WB report, which was published on its website on Wednesday and will be presented to an ad hoc liaison committee next Monday.

However, the report said that over the last decade, the PNA's fiscal consolidation efforts managed to cut deficit by 15 percent of its gross national product (GDP), hailing it as an achievement rarely seen in other places around the world.

It said that the prolonged period of slow economic growth has resulted in persistently high unemployment and stagnation in the average income of the Palestinian citizens.

"The economy will not be able to reach its potential without a peace resolution but meaningful steps can avoid further deterioration," said the report, adding that a policy-level meeting for development assistance to the Palestinian people will be held on Sept. 19 in New York.

"The economy has also not been able to create enough jobs, resulting in stubborn unemployment rates reaching 27 percent in 2016 (18 percent in the West Bank and 42 percent in Gaza)," the report said in its executive summary.

Marina Wes, the World Bank's country director for West Bank and Gaza, said: "The Palestinian economic outlook is worrying with serious consequences on income, opportunity, and well-being."

"Not only will it affect the Palestinian Authority's (PNA) capacity to deliver services to its citizens, it may also lead to wider economic problems and instability," she said in a statement.

The World Bank report said that the international donor support is a must to maintain the PNA's budget-cutting achievements and stave off crisis, adding that in the short term, donors' support and in particular budget support "is essential to avoid a fiscal crisis leading to wider economic problems."

"The PNA's actions will not be enough to fully close the gap, particularly since local borrowing opportunities are now largely exhausted," the report said.

It said that the Palestinian economy would remain hobbled as long as the conflict with Israel continued.

The report made particular mention of Gaza, saying that of 3.5 billion dollars pledged by donors reconstruction following the 2014 war, less than half had so far been disbursed.

"The situation in Gaza is of great concern and the conditions required for post-reconstruction sustainable economic growth are not being put in place," said Wes.

Source : XINHUA