Mideast barriers inflame shortfall

Authority has $500m deficit: World Bank

The Palestinian economy is in a deepening crisis because of a shortfall in donor funding and Israeli obstacles to Palestinian investment in the most fertile parts of the occupied West Bank, the World Bank warned yesterday.

The stark depiction of the Palestinians' economic woes is likely to revive fears in the West of further unrest in the Occupied Territories amid a stagnating peace process and a week of protests against the Palestinian Authority in the West Bank.

The Palestinian Authority is facing a $500 million budget deficit this year, the World Bank said, money needed for the timely payment of 150,000 civil servants' salaries. It urged international donors to fulfil pledges to support the Palestinian economy, but warned that unless Israel eased its physical and economic control over the West Bank, any recovery would be temporary.

"Donors do need to act urgently in the face of a serious fiscal crisis facing the Palestinian Authority in the short term," said Mariam Sherman, World Bank country director for the West Bank and Gaza. "But ... sustainable economic growth cannot be achieved without a removal of the barriers preventing private sector development."

Under the Oslo Accords, Israel controls 60 per cent of the West Bank, Area C. Jewish settlements control some of the most fertile land. Palestinian investment is almost totally barred in Area C, even though Palestinians could reap substantial revenues if they were permitted to develop it, the bank said. Israeli industrial settlements in the West Bank are said to produce $363 million worth of goods for export.

Israel has advanced $80 million in tax revenues that it collects on behalf of the Authority. Israel suggested the crisis was caused by a donor shortfall and the Authority mismanaging its own budget.

It said in a report that it has expanded by 40 per cent the number of Palestinians allowed to work in Israel since early 2011, taken steps to ease movement and facilitate trade in the West Bank and approved dozens of development projects in the West Bank under Israeli control.

Number crunching
* $4.8 billion Palestinian budget
* $500 million budget deficit
* 150,000 civil servants to pay
* 6.2 per cent growth in West Bank and Gaza
* 20 per cent unemployment

- Independent, AP