Overview

  • The lack of peace and reconciliation on the political horizon has created an unsustainable economic situation in the West Bank and Gaza. Even though donor aid had increased government-funded services and fueled consumption-driven growth from 2007 to 2012, this model of growth has proved unsustainable. Donor support has significantly declined in recent years, and naturally aid cannot sustainably make up for inadequate private investment, anyway constrained by weak investor confidence because of ongoing restrictions and the lack of political progress. Recovering slowly from recession in2014, the growth rate is projected to hover around 3.5 % in the medium term.

    The 2014 war in Gaza created a humanitarian crisis and caused US$1.7 billion in losses to the economy, which continues to suffer to this day. Even though growth in the Gaza Strip reached 7.3% in 2016, due to increased construction, Gaza’s economy is not expected to rebound to its pre-2014 war level until 2018. Alongside its stunted recovery, Gaza suffers from severe shortages of electricity with rolling blackouts.
    In 2016, the unemployment rate remained stubbornly high at 27%: 42 % in Gaza and 18% in the West Bank. Youth unemployment in Gaza is particularly worrying at 58%. And, although nearly 80% of Gaza’s residents receive some form of aid, poverty rates are very high.

    The current decline could be reversed in an environment where sustainable, private sector-led growth is fostered, coupled with a commitment of ongoing financial support from the international community. A dynamic private sector can generate the sustainable growth needed; however, restrictions put in place by the Government of Israel continue to stand in the way of potential private investment. Access to Gaza remains highly controlled, and much of Area C, which makes up 60% of the West Bank, is inaccessible to Palestinians.

    Last Updated: Apr 01, 2017

  • The World Bank Group established the Trust Fund for Gaza and the West Bank in 1993 as a mechanism for funding assistance. The Bank’s program in the Palestinian territories focuses on laying the foundation for a future Palestinian state.

    Knowledge products and grants cover various sectors, including private sector development, public financial management, municipal services, energy, water and solid waste management, social protection, health and education.

    Along with offering a range of advisory services, the International Finance Corporation (IFC) continues to support both existing and new clients in the Palestinian private sector.

    The Multi-Lateral Guarantee Agency (MIGA) has underwritten a number of projects in the power, agribusiness, and manufacturing sectors.

    Last Updated: Apr 01, 2017

    • The number of poor and vulnerable with access to social and economic services delivered by NGOs grew by 19% between 2014 and 2016. The number of the World Bank-supported Cash Transfer Program’s beneficiaries from the lowest quintile of poverty grew by 194% and, among these, female-headed households grew by 90%. In Gaza, access to water and wastewater services were restored for over 1.7 million inhabitants.
    • In efforts to increase local accountability and transparency, 94% percent of municipalities in the West Bank and Gaza have applied at least two public disclosure mechanisms, a figure that is up from 68% of them in 2013. Management in the electricity sector has improved, with the revenue collection of electricity distribution companies increasing from about 52% of total billing in 2007 to 84% in 2015. To help increase employment, the Bank has supported the Masar Ibrahim project for experiential tourism in marginalized rural communities, which has provided business opportunities for 53 communities along the path’s mostly rural corridor.
    • The Bank has maintained a robust analytical program to inform the Palestinian Authority (PA) of the economic impact of the restrictions on movement of goods and people and access to resources, and to promote private sector-led growth. The Bank is helping the PA develop its visions for trade, electricity, and generating jobs. A World Bank study, published in October 2013, demonstrated that were the Palestinian Authority given control of Area C, the Palestinian GDP could increase by a third.
    • The Bank functions as the secretariat for the Ad Hoc Liaison Committee (AHLC) of donors to the Palestinian Authority. The Bank submits a report prior to each meeting updating partners on recent economic and fiscal trends, and provides economic and institutional analysis.

    Last Updated: Apr 01, 2017

  • A multi-donor Trust Fund has channeled funds (approximately US$1.4 billion since its inception in 2008) to support the Palestinian Authority’s reform program in macro-fiscal strengthening and public financial management.

    The Partnership for Infrastructure Multi-Donor Trust Fund (PID MDTF), established in 2012 to support infrastructure projects focusing on water, energy, and urban development, has grown to eight donors (Denmark, France, Finland, Norway, Sweden, the Netherlands, Portugal, Croatia) and over US$107 million in funding. The PID MDTF was the main vehicle for channeling donor funding to emergency reconstruction in Gaza for its water, energy and municipal sectors.

    The Government of Norway cooperates with the World Bank on the AHLC and through the Norway West Bank and Gaza Support Trust Fund, which was established in 2014 with a US$2 million pledge. It supports aid coordination by and analytical work in energy, education, and private sector development.

    Last Updated: Apr 01, 2017

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LENDING

West Bank and Gaza: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments



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