Israeli controls holding back Palestinian economy: IMF

The International Monetary Fund today said Israel's tight restrictions were hindering growth of the Palestinian private sector and holding back the Palestinian economy.
In a report following a mission to the West Bank and Gaza, IMF said it expected growth in the Palestinian economy to slow this year to about 4.25 per cent, with little progress expected in cutting unemployment from the current 24 per cent.
The report said the Palestinians need to build the private sector in an economy heavily dependent on foreign aid to surmount a chronic deficit.
"Persistent Israeli controls and obstacles on internal movement, exports, and imports in the West Bank, as well as the virtual closure of Gaza, thwart the private sector," the Fund said.

"The Palestinian Authority needs the continued support of the international community and cooperation of Israel, guided by the common objective of a more vibrant and robust Palestinian economy," it said.
It also said that spending by the PA was too heavily weighted in wages and pensions, and not enough in "much-needed investment in education and public infrastructure," an impediment to private-sector growth.
It forecast a 2013 deficit for the PA of USD 1.7 billion, which is not fully covered by existing donor commitments.
"This gap would likely be covered by further arrears accumulation and domestic bank borrowing, which has already reached prudential limits," the IMF warned.