POST TIME: 21 September, 2019 00:00 00 AM
Liquidity crunch choking Palestinian economy, says World Bank
­AFP, Jerusalem

Liquidity crunch choking Palestinian economy, says World Bank

Despite last month’s receipt from Israel of funds it owed, the Palestinian Authority still faces a financing gap that could top $1.8 billion, the World Bank said Thursday.

Palestinian president Mahmud Abbas’s PA has been in deep financial crisis since February when Israel froze transfers of VAT and customs duties it collects on the Palestinians’ behalf.

His administration had to impose austerity measures, cutting almost half the salaries of its employees.

The cuts hit hard on the Palestinian territories, already suffering unemployment of around 26 percent in the second quarter of 2019, the bank said in its latest report on the Palestinian economy.

Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and it is supposed to transfer the money to the PA. In February, Israel decided to deduct around $10 million a month from the revenues — the sum the PA paid inmates in Israeli jails or their families — prompting the Palestinians to refuse to take any funds at all.

Israel sees the payments to those who have carried out attacks against Israelis as encouraging further violence.

The PA describes the payments as a form of welfare, while Palestinians venerate prisoners jailed by Israel as heroes for their cause.

Last month, Israel’s debt was reduced with the retroactive payment of more than $560 million (506 million euros) in fuel taxes collected by the Jewish state.