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World Bank: Palestinian economy facing severe crisis

April 17, 2019 12:16 P.M. (Updated: April 17, 2019 2:59 P.M.)
BETHLEHEM (Ma'an) -- The World Bank said, on Wednesday, the Palestinian economy is now facing a “severe fiscal shock” due to the tax revenues issue with Israel, calling for a speedy resolution.

The published report, prepared by the World Bank, is due to be presented to the The Ad Hoc Liaison Committee (AHLC) at its next meeting on April 30th in Brussels.

Anna Bjerde, the Acting Country Director for West Bank and Gaza, “The economy, which has not experienced real growth in 2018, is now facing a severe fiscal shock due to the Israeli cuts in tax revenues.”

Bjerde stressed the necessity to find an urgent solution to prevent further deterioration of economic activity and living standards.

Bjerde added that “tax revenues is a major source of public budget income and all segments of the population are experiencing the effects of this crisis.”

The World Bank report highlights the major challenges faced by the Palestinian economy, focusing on the effects of restrictions on the entry of dual-use goods, which are essential for production and modern technology, and calls on Israel to reconsider its application of the system.

The report said that “the Palestinian economy has witnessed low growth rates that are unable to cope with population growth, leading to increased unemployment and deteriorating living conditions.”

According to the report, the Palestinian economy saw "no real growth" the last 12 months, with Gaza's economy contracting by some 7% and the West Bank also underperforming. Thus, the World Bank called on Israel to ease dual-use restrictions, which could bring additional 6% growth to the West Bank economy and 11% to the Gaza Strip by 2025.
The Palestinian economy "is now facing a severe fiscal shock" due of the impasse over Israel withholding tax revenues that the Palestinian Authority (PA) pays to Palestinian prisoners and to the families of killed Palestinians as salaries.

The World Bank report said, "If not resolved, the standoff will increase the financing gap from $400 million in 2018 to over $1 billion in 2019."
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