Palestinian fiscal crisis deepening, WB warns

The World Bank has warned that the fiscal crisis in the Palestinian territories is deepening, urged donors to take urgent action to face up the situation and called for lifting the barriers preventing the private sector development.
In a report on Palestinian economy monitoring released Wednesday, the international financial institution underscores the key role a strong private sector investment will play to drive sustainable growth, deploring however that the private sector is hindered by so many physical, administrative and security restrictions.
The untapped resources of the West Bank are a potential source of private sector growth, particularly urgent against the background of economic slowdown, reduced donor aid, and few positive prospects in the broader political environment, notes the report, entitled Fiscal Crisis, Economic Prospects: The Imperative for Economic Cohesion in the Palestinian Territories.
The document which underscores “the damaging economic effects of geographical fragmentation,” underlines the significance of Area C which is the only contiguous land in the West Bank, but which remains under full Israeli control. Exploiting the resources of this area that holds most of the agricultural lands, natural resources, and land reserves of the West Bank can provide an economic foundation for growth in important sectors of the economy, says the report.
Access to Area C has the potential to give a boost to the private sector and to develop businesses in the sectors of construction, telecommunications, agriculture, and tourism, the report insists.
The report of the World Bank forecasts a US$1.5 billion deficit in the Palestinian budget in 2012 and predicts that Gross Domestic Product growth in the West Bank and the Gaza Strip would slow to 5.6 percent in 2012 from 5.9 percent last year.
The report is issued prior to a meeting in New York on September 23 of the Ad Hoc Liaison Committee (AHLC), a forum of donors to the Palestinian Authority.The Palestinian Authority’s major donors are the United States, the European Union and Arab states.