‘Precarious’ Palestinian economy needs more aid: World Bank

On Monday, the World Bank encouraged donors to increase help for the Palestinian Authority, which it claimed was suffering from a destabilizing fiscal crisis caused in part by “record low” foreign aid payments.

The report, which was released ahead of a donor conference in Brussels, offers a contradictory picture of the Palestinian economy, which is recovering from the siege while food shortages rise in some areas.

In 2021, the economy of the West Bank, a Palestinian enclave occupied by Israel since 1967, grew by 7.8%, helped by a surge in the number of Israeli work permits for Palestinians looking for work in the Jewish state.

In Gaza — a separate Israeli-blockaded territory ruled by Islamist group Hamas — 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.

According to Palestinian Authority spokesman Ibrahim Melhem, Palestinian Prime Minister Mohammed Shtayyeh will meet EU officials in Brussels to advocate for “improvement in the European attitude in terms of assisting the PA.”

Issawi Freij, Israel’s regional cooperation minister, is also set to attend the Brussels summit.

Despite his opposition to Palestinian statehood, Israeli Prime Minister Naftali Bennett has stated that he wants to improve economic prospects in the West Bank.

He has stated that Palestinians earning high Israeli wages and having access to other economic possibilities could assist to lessen violence in the long-running conflict, which has just erupted again.