JERUSALEM, September 18, 2018 (WAFA) – The International Monetary Fund (IMF) drew a bleak picture of the Palestinian economy as longstanding constraints continue to act as a brake to growth and suggested ways out from this impediment.
It said in a report on the West Bank and Gaza economy that will be submitted to the next ad hoc liaison committee meeting that several factors have contributed to worsening economic situation in the Palestinian territories.
The IMF cited the worsening situation in Gaza aggravated by a long Israeli blockade, division, violence and other factors have deemed the outlook “increasingly untenable.”
“Longstanding constraints continue to act as a brake on growth, aggravated by large aid cuts and revenue losses. Gaza is suffering disproportionately, with its economy shrinking and unfolding humanitarian catastrophe. Overall GDP growth is projected to languish below 2 percent per year,” said the IMF report.
It said that Israel has also contributed to the deteriorating situation.
“The intended withholding of clearance revenues under new Israeli legislation will seriously undermine the already fragile fiscal situation. Large external imbalances will persist as restrictions impede development and add to vulnerabilities. Weaker growth and demographic pressures will substantially worsen unemployment, poverty, and per capita incomes.”
The IMF said that the overriding challenge is to revive growth and alleviate poverty in the face of shrinking resources.
“More than ever this will depend on the Palestinian authorities, Israel, and donors coming together to ensure a comprehensive approach to reforms,” it said.
“The priority is to implement adjustment measures that help protect critical public service delivery, social spending and investment, and avoid a disorderly expenditure rollback disruptive to growth. Reforms to strengthen the fiscal framework and public institutions will help achieve this objective, promote public accountability, and reassure donors that resources will be well spent.”
It further suggested that “steps to shore up economic institutions, together with actions to ease restrictions on movement and access, will be crucial to stabilize Gaza and revitalize the overall economy’s capacity to grow.”