The World Bank says the Palestinian Authority faces a funding gap that could exceed $ 1.8 billion in 2019, due to a drop in foreign aid flows and a lack of agreement on transferring its revenues from taxes and import duties (clearing funds) Israel collects for the Authority.
A World Bank report highlights this funding gap that has forced the authority to accumulate debt from local banks, increasing arrears of employees, suppliers and the General Pension Fund, creating huge liquidity challenges for the economy.
The World Bank is due to report to the Liaison Committee for the Coordination of International Assistance to the Palestinian People at its September 26 meeting on the sidelines of the annual UN General Assembly.
“The outlook for the Palestinian territories is worrying, as growth drivers are declining, and the severe liquidity crisis is beginning to affect the PNA's ability to pay civil servants and deliver public services,” said World Bank Managing Director and Resident Representative Kanthan Shankar.
The total revenue received by the Authority in the first half of 2019 fell to half of what it was in the same period last year, mainly due to a 68% drop in clearing funds.
He pointed out that the Palestinian National Authority refused to receive these funds because of withholding Israel 138 million dollars annually.
recession
The report predicted a recession in the following years in the absence of an agreement to restore the normal flow of available revenue.
The PA has been facing a financial bottleneck since Israel passed a law in February 2018 that would allow it to confiscate the amount of tax it collects in favor of Palestine, under the pretext of the PA's financial benefits to the families of Palestinian martyrs and prisoners in Israeli prisons.
In June, Palestinian businessmen agreed with the Palestinian government to provide a $ 200 million loan to help them manage the crisis.