In September 2008, at the Ad Hoc Liaison Committee (AHLC), the World Bank had indicated little improvement in the economic and social situation in the West Bank, while highlighting a progressive worsening in the living condition of the Gaza population. The recent ground invasion of the Gaza strip has delivered an additional blow to the already devastated economy and, since the end of December 2008, more people have been forced to rely purely on humanitarian assistance and foreign aid.
The Palestinian Authority (PA), in collaboration with the donor community, has taken the leadership in delivering such assistance and in distributing the available resources to the affected population in Gaza. It has also produced a damage assessment, summarized in the report on The Palestinian National Early Recovery and Reconstruction Plan for Gaza, 2009 2010 (Sharm El-Sheikh, March 2, 2009) to guide the deliberations of the International Conference in Support of the Palestinian Economy for the Reconstruction of Gaza.
A number of World Bank teams have contributed to the report and carried out damage assessments in the sectors where the Bank is one of the PA partners in project implementation (social safety nets, water and sanitation, municipal and community development, and energy). To complement the PA report, the World Bank would like to provide the donor community –through the present report– with an outline of the various fund-channeling options to support a coordinate response for the recovery and the reconstruction of Gaza.
The first section of the report provides a brief overview of the importance of budget support to the PA, by highlighting that 50 percent of the PA's recurrent expenditures are for the benefit of Gaza, with major items being salaries for teachers and health workers. The report recommends potential donors to provide budget support to the PA directly through the Central Treasury Account. In those situations where our donor partners wish to consider other alternatives, we encourage them to channel their funds to the PA through the EU-PEGASE or through the PRDP-Trust Fund administered by the World Bank.
The second section describes a number of institutions that have a long track-record of implementing donor-financed activities with good performance on procurement and financial management. Donors who wish to provide support to Gaza through Palestinian institutions other than the PA can also choose to work with the Municipal Development and Lending Fund (MDLF) and the NGO Development Center (NDC). On PA implementation capacity in Gaza, the report also provides information on the Palestinian Water Authority (PWA), the Palestinian Energy Authority (PEA), and the Coastal Municipalities Water Utility (CMWU). These institutions have the capacity to implement donor-financed activities in Gaza, provided that the necessary materials are allowed through the crossings.
Finally, the third section of the report emphasizes the importance of a quick re-start of existing donor-financed projects in Gaza and the scope for donors to channel funds to these projects, through parallel finance mechanisms. It describes the seven World Bank projects that provide support to Gaza. This section emphasizes the advantages of scaling up successful on-going projects in key areas, such as social safety nets, water and sanitation, municipalities and NGOs, and electricity. It also notes that the projects which finance cash transfers and/or services (through the PA, municipalities or NGOs) are fully functioning (provided that a steady flow of cash is allowed to enter Gaza). Those that finance physical components, instead, will become executable only once the restrictions are removed and crossings are opened to basic materials, including cement, steel, glass, equipment, and spare parts.