UN warns of serious risk to Palestinian economy without strategic shift

The United Nations (UN) has warned that the Palestinian economy is being undermined by worsening violence, a lack of reform and the absence of a peace process. A report by the UN noted that the negative trends could lead to a “serious reversal” in the Palestinian state-building project if an “immediate” strategic shift is not made. The report also highlighted that declining donor support is threatening the ability of UN agencies to keep pace with growing needs, and that investment in basic service delivery is necessary to meet the expected increase

in needs resulting from current demographic trends.

According to a report, it is recommended that Israel and Palestine should take tangible measures to address the economic and administrative disparities between them. Furthermore, the report suggests that Israel should relax its constraints on the flow of goods in and out of Gaza, in order to optimize the positive impact on the Palestinian economy. The report also called for increased revenue collection and more efficient public spending to improve the fiscal situation of the Palestinian Authority, despite limited implementation of reform measures.

In response, Palestinian

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Prime Minister Mohammad Shtayyeh stated that the government would pursue reforms, but did not offer specifics. He blamed the budget deficit on Israel's policy of withholding some tax income and a dip in foreign donations. Israel routinely withholds tax revenue from the Palestinian Authority, claiming it is in response to payments made to families of Palestinians killed by Israeli forces or during attacks on Israelis. Under previous agreements aimed at achieving peace, Israel is responsible for collecting taxes and customs revenue on behalf of the Palestinian Authority.

The report by the UN

highlights the need for a comprehensive approach to addressing the underlying issues that are undermining the Palestinian economy. The report emphasizes the significance of actual endeavors by both Israel and Palestine to rectify disparities in their economic and administrative ties, and for Israel to extend its relaxation of constraints on the flow of commodities into and out of Gaza in order to optimize the favorable impact on the Palestinian economy. The report also calls for increased revenue collection and more efficient public spending to improve the fiscal situation of the Palestinian Authority.