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Last update - 08:24 27/04/2008 World Bank: PA economy static, mainly because of Israeli siege By News Agencies Tags: Palestinians, Israel  The Palestinian economy will likely remain stagnant in 2008, largely due to continued Israeli restrictions on Palestinian movement, and despite serious Palestinian reform efforts and massive foreign aid, the World Bank said in a report Sunday. "While the PA [Palestinian Authority] has moved ahead with its economic reforms, albeit slowly, there has been little progress on relaxing movement and access constraints," the bank said in the report, a copy of which was obtained by Reuters. Palestinian economic recovery is seen as key to U.S.-backed Middle Eeast peace efforts. Advertisement The international community hopes improvement in West Bank living standards, after eight years of downturn, will shore up support for the negotiations which have yielded little tangible progress so far. In December, donor countries pledged $7.7 billion over three years to help fund a three-year Palestinian reform and development plan. The idea is to gradually cut government spending and revive the private sector, which has been hit hard during Israeli-Palestinian fighting and stifling Israeli restrictions on Palestinian trade and movement. This would eventually make the Palestinians less dependent on international aid. However, the bank said that the private sector revival required for a virtuous cycle of growth has not been realized due to the continued restrictions on movement and access. Earlier in the week, the International Monetary Fund warned that it appears increasingly likely that the Israeli restrictions will remain in place, and that in such a scenario, the Palestinian economy would contract, instead of grow. This would make it increasingly difficult to cover the Palestinian government's deficit with aid. The World Bank had predicted double-digit economic growth, provided Israel, the Palestinian government and the donors do their part. However, the Gross Domestic Product is only expected to grow by 3 percent in 2008, accord to the revised prediction. That, taking into account population growth, leaves per capita income static, if not lower than the previous year, the report said. The bank noted that the Gaza economy has sharply contracted because of the virtual closure of the strip by Israel and Egypt after the violent Hamas takeover there last year. However, even in the West Bank, GDP growth was only modest, the bank said. On Friday, the International Monetary Fund had issued its quarterly review of the Palestinian development and reform plan. The IMF said the Palestinian government in the West Bank has made significant strides toward reducing its huge budget deficit of 27 percent of the GDP, but that international donors need to transfer an additional $400 million to close the spending gap in 2008. However, the report warned that without Israel easing movement restrictions, the Palestinian economy would contract. In recent weeks, Israel has removed some obstacles to movement in the West Bank, but the report, citing UN figures, said that as of March, the overall number of obstacles had increased. Since the outbreak of Israeli-Palestinian fighting in 2000, Israel has covered the West Bank with a network of hundreds of checkpoints, gates and earthen barriers. Israel says the barriers are meant to restrain Palestinian militants, but they have also stifled the Palestinian economy. David Baker, an official in the Israeli prime minister's office, would not comment directly on the IMF report. However, he said that the roadblocks and checkpoints are subject to prevailing security conditions on the ground. Bookmark to del.icio.us   Fake reactor Syrian envoy: Photos of alleged nuke site fabricated by CIA. Modern Moses Commander of legendary Jewish immigrant ship Exodus dies at 90.   1.   In economics, most values ignore black market trade 06:51  |  William 27/04/08   2.   The only way for the Palestinians to have an economy is to... 07:14  |  Mikey 27/04/08   3.   Look at other Muslim countries 08:28  |  Rafterman 27/04/08   4.   How About Terrorism? Does THAT Stall Growth? 09:21  |  IW 27/04/08   5.   The PA`s hidden assets 09:38  |  x-ray 27/04/08   6.   Pals spent EU/US money on weapons, on terror ! 09:55  |  Aaron 27/04/08   7.   that`s ok... 10:16  |  Nechama 27/04/08   8.   PS to earlier post 10:19  |  Nechama 27/04/08   9.   to Rafterman:hardly totalitarian 11:23  |  observer 27/04/08   10.   WRONG - Gaza Economy Bad Due To Bad Pal Leadership 13:58  |  B`Galil 27/04/08   11.   World Bank should be renamed an African monkey enclave 15:41  |  Sal 27/04/08

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