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World Bank Flash: Recent Growth in West Bank and Gaza

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August 31, 2010

BACKGROUND:

The Palestinian Authority (PA) has achieved strong results in recent years, but the resurgence of growth remains dependent on donor assistance.

ü  in the first half of 2010, the economy saw 7% real growth;

ü  in the West Bank, unemployment in the fourth quarter of 2009 fell to 18% from 20% in the same quarter of 2008;

ü  unemployment in Gaza also dropped, falling from 45% in the fourth quarter of 2008 to 39% in the last quarter of 2009;

ü  the PA has unified its cash transfer programs into one consolidated program that has greatly increased the efficiency of the PA’s social safety system and is one of the most advanced in the region;

ü  the PA has improved its budgeting process, budget execution and financial reporting capacity; and introduced commitment controls to reduce spending.

 

The PA’s three-year program of reforms to help re-start economic growth in West Bank and Gaza (WB&G) and to improve the welfare of citizens has resulted in improved security and more efficient service delivery and there is evidence of increased investor confidence.  However, recent economic growth will not be sustainable in the absence of private sector-led growth, which is dependent on easing movement and access restrictions within West Bank and to the international markets.

HOW WE'RE HELPING

·         The World Bank Group has been a steadfast partner to the PA and in support of the economic development of the Palestinian people since the Oslo Accords in 1993, investing over $608 million of its funds in WB&G.   A significant portion of Bank assistance is designed to support the PA as it continues to implement its reform program, by supporting actions in two policy areas: (i) strengthening the fiscal position and (ii) improving public financial management.

·         The Bank portfolio currently consists of 11 projects (over $200 million in commitments).  Implementation is largely on schedule but 50% of the portfolio (implemented in Gaza) is facing logistical constraints due to restrictions on flows of material into Gaza.

·         In order to fulfill the twin objectives of balancing medium-term development activities and providing emergency assistance, the Bank has developed a wide variety of flexible instruments, including: technical assistance and analytical work for private sector development, and for regulatory and institution building;  budget support, cash transfers to vulnerable groups and funding non-salary recurrent expenditures in the social sectors;  emergency municipal assistance, and rehabilitation/construction of basic infrastructure.  For example, this flexible approach was applied through the $21.5 million Gaza Emergency Response Additional Financing Program.

·         In the area of capacity building, we provide substantial technical assistance and analytical work through our reports and projects.  Areas of Bank’s current involvement include: higher education, pensions, public finance management, municipal finance, cash assistance program for poor; and support to leading economic /regulatory institutions, such as the Palestinian Monetary Authority, Palestinian Central Bureau of Statistics, and Palestinian Pensions Authority. 

·         The cash assistance programs in the WB&G developed by the Bank, has supported the PA in developing and managing one of the most advanced cash assistance programs in the Region which can be scaled-up during crises.  This PA-managed Palestinian National Cash Transfer Program has provided cash transfers to more than 63,000 poor families using an effective poverty-targeting mechanism and database. 

·         Thanks to a World Bank project co-financed with the EC, about 600,000 people living in the northern West Bank, are now enjoying safe disposal of their municipal waste at a new sanitary. This also led to closing about 85 uncontrolled dumpsites in Jenin and Tubas , freeing up 1,200 dunums of rehabilitated land that are now open for development. 

·         The Bank has played a prominent role in donor coordination through programmatic leadership, analytical and advisory support (in sectors including water resources management, the health sector, gender and social inclusion, trade facilitation, municipal finance, transportation, and financial sector), and mobilization of funds through co-financing.  Overall, the Bank has administered more than $1.5 billion provided by other donors, which translates into nearly $3 of donor resources for each $1 committed from the Bank. The ratio is even higher ($4 for every $1) if parallel financing of Bank projects is included.

·         While private sector development remains challenging due to security concerns, IFC, the World Bank Group’s private sector arm, has recently tripled its investments in WB&G, including: $20 million in the Bank of Palestine; $3.6 million in trade finance assistance to local banks; $30 million in the Wataniya mobile-phone network; and a $72 million guarantee in support to the $500 million housing finance facility that will provide long term affordable home loans through local banks (in parallel, the Bank is providing technical assistance to the PA to develop its housing policies and regulatory institutions.)

For more information, please contact:

Hafed Al-Ghwell, World Bank Group

Email:     halghwell@worldbank.org

Office:     +1-202-473-8930

 

 


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