São Paulo – The Palestinian Authority (PA) loses USD 285 million in revenues annually. According to a World Bank report, this is the amount the Israeli government withholds from the Palestinian government each year. The report will be presented this Tuesday (19) in Brussels, Belgium, to the Ad Hoc Liaison Committee, a political committee for the development assistance to the Palestinian people.<\/p>\n
According to the report, these revenues could significantly ease the Palestinian government’s fiscal stress. “If revenue losses are mitigated, this can reduce the 2016 fiscal deficit to below USD 1 billion, and narrow the expected financing gap by more than 50 percent”, said Steen Lau Jorgensen, World Bank Country Director for West Bank and Gaza.<\/p>\n
For the World Bank, the revenue-sharing agreements outlined by the Paris Protocol, whereby the government of Israel collects VAT, import taxes and other revenues on behalf of the Palestinian Authority and shares them on a monthly basis, have not been systematically observed. These so-called clearance revenues constitute over two thirds of public revenues. <\/p>\n
According to a World Bank statement, the majority of these fiscal losses results from leakage of tax on bilateral trade with Israel and undervaluation of Palestinian imports from other countries.<\/p>\n
The report points out that reviving the Israeli-Palestinian Joint Economic Committee, originally set to monitor implementation of the Paris Protocol and resolve outstanding issues, could significantly enhance economic and fiscal cooperation between the parties. This, the World Bank says, includes reviewing the high handling fees levied by Israel, which currently finances nearly a third of the total budget of Israel’s customs and VAT department. <\/p>\n
In addition, USD 669 million in accumulated revenues are pending with the government of Israel, the World Bank emphasizes. The amount includes pension contributions from Palestinians working in Israel and their employers, expected to be transferred to a dedicated fund that is yet to be established by the PA. It also covers deductions from the salaries of these workers that should be transferred to cover their health services and social benefits.<\/p>\n
The document points out that, recently, the Israeli government agreed to transfer USD 128 million to reduce some of the losses accumulated throughout the years. For the IBRD, this could be the first step for strengthening dialogue. <\/p>\n
The bank says that the Gaza Strip’s economy should not recover to the levels before the Israeli attacks (July\/August 2014) until 2018.<\/p>\n
At the end of 2014, Egypt, Norway and the PA organized the Cairo Conference, an event to collect funds for Palestine. In the event, governments from different countries committed to donate collectively USD 5 billion for the Arab country, with USD 3.5 billion going to the Gaza Strip. Slower than expected aid continues to hinder the recovery of the territory, since only 40% of the total announced in the conference was disbursed.<\/p>\n
“At this pace, pledges are estimated to be fully disbursed only 5 years after the end of the war. One can understand the exhausted population when 20 months after the war, only 9 percent of totally damaged houses and 45 percent of partially damaged houses have been repaired. Over 14,800 families continue to be displaced. For these people in Gaza, there is no escape”, said Jorgensen.<\/p>\n
*Translated by Sérgio Kakitani<\/strong><\/p>\n