Liquidity Crisis Weighs on Palestinian Economy, World Bank Says

(Bloomberg) -- The Palestinian Authority faces a financing gap that could exceed $1.8 billion for 2019, the World Bank said in a report.

The financing gap is due to declining foreign aid and an unresolved dispute regarding the transfer of taxes and import duties collected by Israel on behalf of the Palestinian Authority. Israel transferred some 2 billion shekels ($567 million) of fuel taxes in August despite an ongoing disagreement over withheld funds that Israel says were payments to families of Palestinians in jail or killed by security forces for carrying out attacks against Israelis.

The transfer will allow the Palestinian Authority to manage until the end of the year with reduced spending, “but a more comprehensive agreement needs to be reached covering the mechanism and nature of Israeli deductions from clearance revenues going forward,” the report said.

World Bank Calls on Israel to Ease Up on Palestinian Economy

Growth in Gaza is forecast at 1.8%, after a 7% drop in 2018. Growth in the West Bank is expected to slow to 1.2% in 2019, the lowest level over the last five years.

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