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World Bank: Despite growth, ‘precarious’ Palestinian economy needs more aid

Report ahead of donor conference in Brussels – to be attended by Israeli minister – finds West Bank economy grew 7.8% in 2021, but was hit by record-low foreign donations

A Palestinian vendor displays a variety of pickles, widely desired as a side dish while breaking fast in Ramadan, in front of his cafeteria in the West Bank city of Ramallah, April 2, 2022.  (Nasser Nasser/AP)
A Palestinian vendor displays a variety of pickles, widely desired as a side dish while breaking fast in Ramadan, in front of his cafeteria in the West Bank city of Ramallah, April 2, 2022. (Nasser Nasser/AP)

RAMALLAH, West Bank — The World Bank on Monday urged donors to boost support for the Palestinian Authority, which it said was facing a destabilizing budget crisis linked partly to “record low” foreign aid contributions.

The report published ahead of a donor conference in Brussels paints a contrasting view of the Palestinian economy, which is seeing a post-lockdown recovery even as food insecurity worsens in places.

The economy in the West Bank posted 7.8 percent growth in 2021 — part of a rebound also fueled by an increased number of Israeli work permits for Palestinians to find jobs in the Jewish state.

In Gaza — a separate territory ruled by Islamist terror group Hamas, under Israeli-blockade to prevent the import of arms — the economy was slowed down by an 11-day war with Israel last year but still saw 3.4 percent growth.

The growth in the West Bank allowed the PA to increase tax revenue but the financial outlook remains “precarious,” the World Bank said.

“The fiscal situation remains highly challenging,” the organization said, adding that the PA was now paying only “partial salaries since November.”

The PA’s 2021 budget deficit hit $1.26 billion, while a “record low” $317 million was received in foreign aid, the World Bank said.

Palestinian Authority Prime Minister Mohammed Shtayyeh was set to meet EU officials in Brussels to push for “progress in the European position in terms of supporting the PA,” the authority’s spokesman Ibrahim Melhem told AFP.

Israel’s Regional Cooperation Minister Esawi Frej is also expected at the Brussels conference.

Israeli Prime Minister Naftali Bennett opposes Palestinian statehood but has said he wants to boost economic opportunities in the West Bank.

He has argued that Palestinians earning high Israeli wages along with other economic opportunities could help reduce violence in the long-running conflict, which has spiked again in recent weeks.

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