Saturday, September 21, 2019

The Arab League deploys financial safety net for PA


By J.J. Rhies - April 22, 2019
TAGS:
Section: [Main News]
Tags: [financial crisis]

The Arab League have announced they will give a monthly $100m to the Palestinian Authority, which was left reeling after Israel slashed millions in aid in March.

 

The move comes only days after a World Bank report said the Palestinian economy is experiencing “severe fiscal shock” as a result of the recent monetary cut.

 

If not addressed, the reduction would “increase the financing gap from US$400 million to over US$1 billion in 2019,” the report stated.

 

Additionally, Israel’s restriction on imported products with both civil and military uses, known as dual-use goods, has negatively impacted economic growth, according to the report.

 

Anna Bjerde, the World Bank Acting Country Director for the West Bank and Gaza, said the import ban puts a ceiling on “economic diversification and sustainable growth in the Palestinian territories.”

 

“A revamp of the restrictions on dual-use goods is critically needed,” she said.  

 

The report claimed the West Bank and Gaza economies could grow by six percent and 11 percent, respectively, over the next six years if Israel eased its dual-use goods restrictions.   

 

Spate of aid cuts to PA has threatened the Palestinian economy

 

In March, Israel cut five per cent, or $138m, of its monthly financial assistance to the PA, which came from import tax revenues.

 

The reduction was a symbol of the state’s discontent with the Palestinian government’s policy of paying families of Palestinian prisoners in Israeli jails, many of whom are militants, according to Israel.

 

Israel is withholding a sum equal to the grand monthly total that the PA pays to the families.

 

In response to the cut, the PA rejected all of the tax money Israel collects for it, which in January was almost 700 million shekels, or roughly half of the West Bank government’s monthly budget.

 

The PA also halved the salaries of all civil servants who earn more than 2,000 shekels per month, as part of an emergency budget plan.

 

It has not stopped its payments to families of jailed Palestinians, however, and Finance Minister Shukri Bishara said it had no plans to do so in the future.

 

Similarly, the PA has seen a recent, large decrease in financial assistance from the US.

 

In February, the PA refused all US aid after the US passed a law that could allow it to investigate aid-receiving countries for abetting any terrorist act that harms Americans.

 

In September 2018, the Trump administration slashed $200m USD, more than 720m shekels, in annual aid to the West Bank and Gaza Strip.

 

Only weeks prior, it fully cut its aid to the United Nations Refugee and Works Agency for Palestine Refugees in the Near East - an annual reduction of $350m USD or 1.2b shekels.  

 

 

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