Israel Matzav

World Bank official: Palestinians on verge of bankruptcy

... To put it simply: The PA is on the verge of functional bankruptcy. The failure to make the salary payment in full and on time will affect hundreds of thousands of people who feed at its table, and the tens of thousands of suppliers and merchants who earn their living from its employees. They will join the masses of unemployed. According to the World Bank, the unemployment rate in the territories exceeds 20 percent, with a rate of about 30 percent in the Gaza Strip, over 40 percent in the southern part of Gaza and among young people (ages 16-25) in southern Gaza, the favorite source of cannon fodder for Islamic Jihad, unemployment reaches the alarming rate of 70 percent. The bankruptcy of the PA following the elections, Roberts warns, could generate a shock of unimaginable dimensions.

"The Palestinian government needs the continued assistance of the international community," Roberts declares, "and to secure that, it must begin to assume its responsibilities." [Is the international community going to hold Abu Mazen's feet to the fire to make the 'Palestinian government' begin to assume its responsibilities? Don't hold your breath. CiJ] Raising salaries at a time when resources are unavailable for this, he notes, is precisely the opposite of demonstrating responsibility and reliability. The direct consequence of this move was a decision by the Bank, supported by the European Commission, to freeze $60 million for funding the PA's operating budget. According to Roberts, this far-reaching step [Far reaching step? With a budget of hundreds of millions? CiJ] was taken because the Palestinians did not fulfill their commitments on budget control. Were the donors not to hold the PA responsible, they would lose the confidence of their taxpayers that enough control can be exercised to prevent the money from being used to finance acts of terror.

Roberts notes that the amount of assistance the Palestinians are getting - $5 billion in five years, or $300 per capita annually - is the highest granted to any entity since World War II. "To maintain the deep involvement of the donors, and their diplomatic attention, as well as the desire of the private sector to invest additional money, the PA must improve its performance," Roberts states. Unfortunately, he continues, Yasser Arafat's departure has not brought about a dramatic change for the better - in fact this last year has witnessed serious deterioration in internal law and order and budget management.

posted by Carl in Jerusalem @ 11:01 AM