World Bank strategy for a prosperous and viable Palestinian State – World Bank paper

2008 is an important juncture for economic development and fiscal stability in the West Bank & Gaza. Following the Ad Hoc Liaison Committee (AHLC), Annapolis, and Paris Pledging conferences in 2007, the stage is now set for the implementation of the Palestinian Reform and Development Plan (PRDP) for 2008-2010, envisioning a the establishment of an economically sustainable Palestinian State. The vision described in the PRDP is ambitious, requiring simultaneous tripartite actions from the Palestinian Authority (PA), Israel, and the international community.

The World Bank is committed to the fulfillment of this vision. To this end, and in close consultation with the PA, the World Bank West Bank and Gaza program has recently finalized its strategy proposal for 2008-2010, and will present it to the to the Board of Directors in Washington DC next month.

The proposed strategy focuses on the PRDP’s twin objectives of fiscal stability and development. On the fiscal track, a central component is the establishment of a trust fund for PA budget support, aimed at disbursing over USD 100 million in donor funding in 2008. An additional USD 40 million per year of World Bank resources will be allocated for budget support in 2008-2009.

The strategy’s development track builds on the World Bank’s existing development projects, in which over USD 500 million have been invested since the mid-nineties, and adds new ones. The Bank proposes to continue supporting the water and wastewater sector, including the construction of the new wastewater treatment plant in Gaza, and to replicate the success of the Jenin solid waste disposal site in the Hebron area. These projects will be complimented with support for the expansion and upgrading of Palestinian electrical infrastructure.

Social protection and development programs remain central to World Bank agenda, and the strategy proposes continued support for the Municipal Development and Lending Fund (MDLF), the launch of a village and neighborhood development program and continued support for social safety net payments. Support for economic and private sector development will be provided through a number of channels, including matching grants for Small and Medium Enterprises (SMEs) seeking new markets and product development, support for land administration reform, and the Bank’s ongoing advocacy regarding movement and access restrictions as an obstacle to Palestinian economic recovery. Technical assistance and policy support will be provided in a number of areas, including trade facilitation, health financing, transport, housing, telecommunications regulation, and other components of public sector management.

The World Bank looks forward to the finalization of this strategy and to its implementation in close cooperation with the Palestinian Authority.