18 pct deficit in PNA budget: Palestinian official

A Palestinian official estimated on Tuesday the deficit of the Palestinian National Authority's (PNA) budget at 18 percent of its gross domestic product.

Mohammed Shtayyeh, head of the Palestinian Economic Council for Development and Reconstruction (PECDAR) and member of Fatah central committee, said in a statement that the deficit still exists despite the advance in the Palestinian tax collection, which means the financing gap will still be large for this year.

Shtayyeh said the Palestinian economic problem is political in the first degree, accusing Israel of conducting measures that are not conducive to improving the investment climate.

"On the contrary, (Israel's measures) are repellent to investments, especially in light of the absence of a political horizon," he said.

He said the Palestinian economy is "suffocating because of the Israeli restrictions on the factors of production, the freedom of movement, and access to markets, which led to a significant decline in the economic situation."

He added that the continuous blockade on the Gaza Strip since 2007 has led the Palestinian private sector to decrease its investments, which is proved by the daily data of the stock market.

He explained that the weak economic activity decreases the tax revenues, leading the PNA to revert to loans of commercial banks or delay payments due to the private sector.

Shtayyeh noted that the Palestinian economy is being held "hostage" to the international aid and the transfer of taxes Israel collects on behalf of Palestinians, adding that both are "unstable."

He added that the main economic problems to have a direct political and social impact are the high rates of poverty and unemployment in the West Bank, and the largely higher numbers in Gaza.

Regarding the reconstruction process after the 2014 Israeli war on Gaza, Shtayyeh said the current mechanism is not conducive to the reconstruction, describing it as a "complicated and slow."

He explained that the construction materials that entered the Gaza Strip throughout the past year didn't exceed six percent of the needed materials, calling upon Israel to lift the blockade on Gaza and not "legalize" it.

These statements come as a World Bank report stated that Palestinians are getting poorer for the third year in a row.

The report published on Al-Ayyam newspaper stated that "the Palestinian economy will continue to perform below its potential until there is a permanent peace agreement."

The World Bank stated, in the report to be submitted on Wednesday to the Ad Hoc Liaison Committee in New York, that "there is substantial upside potential in the Palestinian economy, even without a final peace deal, if existing agreements are implemented and restrictions lifted."

The report stressed the need to increase aid provided to the PNA by donors, as the financing gap in the PNA's budget cannot be closed only through reforms.

The report also noted that the declining donor aid, the war and the suspension of transferring revenues to the PNA, and the continuous Israeli restrictions have had a severe impact on the Palestinian economy.

The World Bank warned that the slow donor aid disbursements and restrictions on imports are delaying the Gaza reconstruction process, explaining that only 35 percent of the pledges made for Gaza reconstruction have been paid.

Israel launched a 50-day large-scale Israeli war on the Gaza Strip last year, killing around 2,200 Palestinians and wounding more than 10,000 others. Seventy-three Israelis, including 67 soldiers, were also killed.

The war has left large destruction in housing, industry, farming and infrastructure of the Gaza Strip, where tens of thousands of houses were destroyed.

The United Nations mediated to reach an agreement between Israel and Palestinian Authority on a UN-supervised reconstruction process, yet Palestinian bodies complained that the mechanism includes tight restrictions on monitoring the delivery of construction materials.

Under an Egyptian-Norwegian auspices, a conference held in Cairo for Gaza reconstruction on Oct. 12 pledged to pay 5.4 billion dollars in aid, half of which to be allocated for reconstruction. Endit