The World Bank said that it expects a financing gap in the Palestinian budget of 760 million dollars after receiving the clearance, and a contraction of the Palestinian economy by 8% this year.
In its latest report, released today, Tuesday, the World Bank said, "The Palestinian economy is going through extremely difficult situations in 2020, as it faces three crises that exacerbate each other, namely: the outbreak of the new Corona pandemic, a severe economic slowdown, and a political confrontation with the Israeli government that has led The transfer of clearance revenues has been delayed for more than six months, and he said, "As a result, GDP for the whole year is expected to contract by about 8%."
The World Bank added that the Palestinian Authority’s recent decision to resume coordination with Israel will lead to an alleviation of financial distress. “Nevertheless, it is expected that there will be a large financing gap of $ 760 million for 2020 (deficit after the expected grants), and it will remain necessary for the Palestinian Authority and society Donors and Israel made great efforts to secure additional funding. "
The total Palestinian clearance revenues accruing to Israel since May are about 3.1 billion shekels (about 920 million dollars), and the expected financing gap, before resuming its transfer, was about 1.6 billion dollars.
The World Bank stressed the need for regular transfer of clearance revenues from Israel as a condition for preserving economic stability in the future.
"In light of the role that clearance revenues can play as a potential factor in stabilizing the conditions of the Palestinian economy, ensuring their uninterrupted flow is a prerequisite for reducing fluctuations and maintaining economic stability in the future," he said.
He believed that the Corona virus crisis exacerbated the risks of the financial sector, "which pushed the concerns related to stability to new high levels, especially in light of the increase in direct and indirect exposure of the banking system towards the Palestinian Authority (the increase in the volume of credit granted to the government and public employees), and the deterioration of the quality of portfolios. Credit to the main economic sectors. "
"Policies aimed at limiting the impact of the Coronavirus outbreak on the financial situation should be well designed and directed, maintain the integrity of prudential regulations, and ensure continued confidence and confidence in the banking system," the World Bank said at the conclusion of its report.
