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IMF: Donors need to support West Bank, Gaza recovery

Update: May, 20/2015 - 11:15

WASHINGTON – The International Monetary Fund called on Tuesday for more donor aid to support the recovery of the West Bank and Gaza Strip economy, citing an uncertain outlook for the Palestinian territories.

The IMF said in a report that the reconstruction process in the Gaza Strip, ravaged by the war between Israel and Hamas that ended last August, "is moving far more slowly than expected".

The economic cost of the 50-day war is estimated at US$4 billion for Gaza, the IMF noted, as tens of thousands of homes and business were destroyed and the area was under Israeli and Egyptian blockades.

"While notable progress has been made recently with the provision of materials for the repair of individual homes, larger construction projects that are required for a job-creating economic recovery are still pending," the report said.

According to the IMF, of the $3.5 billion promised for the reconstruction of Gaza at the Cairo Conference in October, only about 27 per cent had been disbursed by mid-April.

The Washington-based crisis lender, which provides technical assistance to the West Bank and Gaza, said the economic outlook for the Palestinian territories is "highly uncertain". The economy fell into recession in 2014 for the first time since 2006.

A key uncertainty is the continuation of clearance revenues, revenues collected by Israel in the form of indirect taxes on imported goods and later transferred to the Palestinian Authority, which account for two-thirds of total revenues.

Israel froze the transfer of the revenues from December to March, wreaking havoc on the Palestinian authority's finances.

The IMF projected a mild economic recovery in the Israeli-occupied West Bank this year, with growth at 2.5 per cent, in part based on the assumption of steady transfers for the rest of the year.

For Gaza, growth was expected to rebound to 7.0 per cent from a weak 2014 base.

Whatever measures the Palestinian authorities take to repair finances, the IMF said, they "might not be sufficient to fully close the financing gap" and "additional donor aid would be needed". - AFP

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