IMF report: PA urgently needs $1.5b to cover financing requirements

The Palestinian Authority urgently needs $1.15 billion to cover external recurrent financing requirements in 2009, the International Monetary Fund (IMF) said in a report released on Thursday.

The Western-backed government also needs $500 million for development projects, and at least $600 million for reconstruction and rehabilitation of Gaza following Israel's offensive last month, the IMF report said.

It added that should the funds not be paid immediately the cash-strapped authority would need to cut its cash expenditures and likely accumulate arrears, including on wages.

Palestinians hope to raise $2.8 billion at an international conference in Egypt on Monday aimed at rebuilding the Gaza Strip after the Israeli attack.

The IMF report also urged Israel to relax restrictions on movement of goods in the West Bank, where Palestinian President Mahmoud Abbas' government holds sway, to enable recovery of trade and private investment.

Abbas favors a comprehensive peace treaty with Israel, to create a fully-fledged Palestinian state in the West Bank and Gaza. Western nations have shunned Hamas, the Palestinian militant group ruling the Gaza Strip, for its refusal to recognize Israel and renounce violence.

"The restrictions in the West Bank have overall been tightened compared to 2007, despite some relaxation in late 2008," the report read.

Israel, the report added, had increased the isolation of Gaza Strip "markedly" since November 2008. Hamas, which won a Palestinian parliamentary election in 2006, took control of Gaza after ousting forces loyal to Abbas in 2007.

The report said Israeli restrictions on the passage of goods and people across Gaza's primary crossings remained tight even after the cessation of hostilities in mid-January.

"Slow progress in the peace process combined with continued [Israeli] restrictions on movement and access would further delay private sector recovery and impede public investment and reconstruction," the report said.