2017年-世界发展银行全球_Economic_Monitoring_Report_to_the_Ad_Hoc_Liaison_Committee_34页_1mb

Economic Monitoring Report Summary

Core Content

This report provides an overview of the economic situation in the Palestinian territories, highlighting key challenges and opportunities in the areas of growth, unemployment, poverty, public finance, and the energy sector. It emphasizes the need for coordinated efforts among the Palestinian Authority (PA), the Government of Israel (GoI), and international donors to improve the economic and energy outlook for the region.

Main Points

1. Economic Growth and Challenges

• The Palestinian economy is characterized by volatile and unsustainable growth, driven by external restrictions and limited political stability.
• Real GDP growth in 2016 reached 3.5% (with 4.1% in the West Bank and 7.7% in Gaza), but this is not sufficient to improve living standards or reduce unemployment.
• Growth in Gaza was primarily due to construction activity and increased imports of building materials, while West Bank growth was linked to household consumption supported by bank loans.
• Unemployment remains high, with an average rate of 27% in 2016, and youth unemployment in Gaza is twice as high as in the West Bank.
• Poverty levels have not improved significantly, and shared prosperity has stagnated as the bottom 40% of the population has not seen faster income growth compared to the rest.

2. Public Finance

• The fiscal deficit in 2016 was USD1.09 billion (8% of GDP), but one-off receipts reduced it by 26%.
• Public revenue increased by 25% in 2016, mainly due to one-off transfers from the GoI and telecom license payments.
• Public expenditure grew by 5%, driven by wage increases and social transfers.
• The PA faces a USD0.8 billion financing gap in 2017, with aid declining from 32% of GDP in 2008 to 6% in 2016.
• The wage bill is expected to grow by 3% in 2017, despite a zero net hiring policy, due to mandatory salary increases, retroactive adjustments, and promotions.

3. Banking Sector

• The banking sector has been relatively stable, but Israeli correspondent banks are derisking, which poses a threat to financial services.
• The PA is working to strengthen its systems to prevent money laundering and financing of terrorism.
• PA's exposure to the banking sector has stabilized, but monitoring is still required by the Palestine Monetary Authority (PMA).
• Investment in the energy sector is critical for economic growth and private sector development.

4. Energy Sector

• The energy sector is a key constraint on economic growth, with electricity shortages in Gaza and peak period restrictions in the West Bank.
• World Bank projections indicate a 3.5% annual growth in electricity demand until 2030, with Gaza's needs nearly doubling.
• Energy constraints could add 0.4 percentage points to Gaza's GDP growth rate annually through to 2025.
• Private sector investment is essential to address the energy shortfall, but requires supportive policies from both the PA and the GoI.
• Interim power purchase agreements and connections to the 161kV line to Gaza are priorities to improve energy supply.
• Institutional reforms are needed to ensure energy suppliers are paid, which is critical for importing energy and encouraging investment.

5. Reconstruction of Gaza

• Donor support has reached 51% of the Cairo Conference pledges, but further progress is limited unless larger donors increase their contributions.
• Total disbursements by the end of 2016 were USD1.796 billion, USD200 million more than in July 2016.
• Planned disbursements were USD3.3 billion, but actual disbursements fell USD1.4 billion short.
• Funding gaps remain, particularly in reconstructing housing – USD316 million is needed to repair over 4,000 totally destroyed and 59,000 partially damaged housing units.
• Detailed Needs Assessment (DNA) has received only 37% of total disbursements, indicating a lack of focus on critical reconstruction needs.

Key Messages

• A paradigm shift is needed to create a supportive environment for investment and growth.
• Policy reforms by the PA are essential to improve the business environment, reduce bureaucracy, and increase private sector participation.
• The GoI must facilitate access to resources and trade to boost economic competitiveness.
• International donors should increase support and implement innovative financing schemes to reduce political risks and encourage private investment.
• Energy security is a critical issue that requires increased imports, domestic generation, and improved transmission infrastructure.
• Reconstruction efforts need more funding and targeted investment to address the housing crisis and support long-term development.

Critical Challenges

• Political instability and external restrictions continue to hinder economic growth and job creation.
• Donor support has declined significantly, reducing the capacity of the PA to manage public finances.
• Unemployment and poverty are worsening, particularly in Gaza, due to limited economic opportunities and high vulnerability.
• Banking sector risks are increasing, with derisking by Israeli banks and insufficient domestic revenue.
• Energy shortages are limiting growth potential and threatening economic development.

Conclusion

The report underscores the urgent need for coordinated action among the PA, GoI, and international donors to address the economic and energy challenges facing the Palestinian territories. It calls for policy reforms, improved access to resources, and increased investment to create a sustainable growth path and improve living standards.