“[International Monetary Fund] staff considers that the [Palestinian Authority] is now able to conduct the sound economic policies expected of a future well-functioning Palestinian state, given its solid track record in reforms and institution-building in the public finance and financial areas.” – IMF Review of Progress April 2011

Where we are heading

Amaar tower - Ersal CenterPalestinians have always been hard workers, but over the past few years we have worked with exceptional diligence to build ourselves up. At the end of 2007 the Palestinian National Authority presented a strategy for a comprehensive state-building initiative, and it has been remarkably successful. According to the International Monetary Fund (IMF), average real Gross Domestic Product (GDP) growth in the West Bank and Gaza was about 7% in 2009 and reached as high as 9% in 2010, despite the global financial crisis. IMF analysts credit the Palestinian leadership, saying that, “strong performance since 2008 has been enabled by [the Prime Minister Salam] Fayyad government’s sound economic management and reforms”. Palestine’s prudent fiscal policies have allowed it to dramatically reduce its dependence on foreign aid (from $1.8b in 2008 to $1.2b in 2010), and the government has, according to the IMF, “made major strides since 2008 in raising the quality, transparency and timeliness of…economic and financial statistics.”

chartThe reforms of the past three years have not just been about economic growth. Palestinians understand that sustainable progress can only happen if the population has access to good education and healthcare. According to a 2011 report by the World Bank, “education and health in the West Bank and Gaza (WB&G) are highly developed, comparing favorably to the performance of countries in the region as well as globally. For example, enrollment in secondary education is roughly 20 percentage points higher than the rate in the average middle income country, and levels of malnutrition are 7 times lower.”

Remaining challenges

These widespread reforms demonstrate the dedication Palestinians have to creating a brighter future for their children. The continued occupation of Palestinian land by a foreign military, however, remains the most significant obstacle to continued progress.

The International Monetary Fund recognized this in their most recent report, which states that, “the recovery cannot be sustained without a further easing of Gaza’s blockade and of restrictions on movement and access in the West Bank.” It goes on to say that, “to sustain the solid economic growth and reduce unemployment, prompt action needs to be taken by the Government of Israel to ease restrictions on economic activity.”

The World Bank agrees. It concluded that, “ultimately, sustainable economic growth in [the West Bank and Gaza] can only be underpinned by a vibrant private sector. The latter will not rebound significantly while Israeli restrictions on access to natural resources and markets remain in place.”