Palestinian economy needs more aid — World Bank

RAMALLAH, Palestinian Territories — The World Bank on Monday urged donors to boost support for the Palestinian Authority (PA), which it said was facing a de-stabilising 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, Palestinian territories occupied since 1967, posted 7.8 per cent growth in 2021 — part of a rebound also fuelled by an increased number of work permits for Palestinians to find jobs in the areas ruled by the Israeli occupation.

In Gaza — a separate Israeli-blockaded territory ruled by Hamas — the economy slowed down last year but still saw 3.4 per cent 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 organisation 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 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 said.

Israel's Regional Cooperation Minister Issawi Freij 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 wages while working in the areas ruled by the occupation forces along with other economic opportunities could help reduce violence in the long-running conflict, which has spiked again in recent weeks.