Palestinian Banks Reach 'The Red Line'

Palestinians Monetary Authority Chairman, Jihad Al-Wazir, recently warned of a growing financial crisis plaguing the Palestine Authority, writes Danny Rubinstein. By July, it will be difficult to pay the salaries of more than 150,000 employees in the West Bank and Gaza. 

al-monitor Disadvantaged Palestinians wait at the entrance to the Palestine Bank.  Photo by REUTERS/Nayef Hashlamoun.

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palestine, financial crisis, dr. dihad al-wazir, banks

Jun 6, 2012

The Palestine Monetary Authority Governor warns against escalation of the financial crisis plaguing the Palestinian Authority

The Palestine Monetary Authority Governor, Dr Jihad Al Wazir, warns against escalation of the financial crisis plaguing the Palestinian Authority. In an interview with the Israeli daily business newspaper Calcalist, Al Wazir says that the regional and global situation portends further deterioration. He cautions that "the financial crisis the Palestinian government is experiencing may worsen even further if Arab States fail to transfer the promised [aid] funds. In that case, as early as July, the Palestinian government will find it difficult to pay the wages of its more than 150,000 employees in the West Bank and Gaza."

The global crisis holding up delivery of aid funds from the Gulf States

Dr Jihad Al Wazir is the son of Khalil al-Wazir [known as Abu Jihad], one of the Fatah leaders [and founders and a top aide of former PLO chairman Yasser Arafat], who was killed in a raid by an Israel Defense Forces' commando team on his home in Tunis in 1988. In the Palestinian Authority, Dr Jihad Al Wazir enjoys professional prestige on his own merit, having assumed about three years ago the office of the Palestine Monetary Authority Governor, which corresponds to the office of central bank governor.

In the interview to Calcalist, Al Wazir disclosed that, given the economic instability in both the [Mid-Eastern] region and the world, the Palestine Monetary Authority has instructed the banks in the territories not to grant any more loans to the [Palestinian] government in Ramallah. "The banks have reached the red line and to maintain their stability, they should not grant any more loans to the [Palestinian] government." According to Al Wazir, unless the [Palestinian] government receives aid funds, it will not be able to honor its commitments already in coming July.

Al Wazir explains that due to the global economic crisis, which affects even the wealthy Gulf Oil States, aid funds are not available any more as readily as they used to be, as evidenced, among other things, by the decline in the amount of funds transferred by Palestinians working in the Gulf States to their families in the West Bank and Gaza.

Governmental agencies formed in anticipation of the establishment of a Palestinian state

At the end of last week [May 30], Al Wazir participated in the Arab Business Conference 2012 [in Nazareth], initiated by the Arabic financial and business magazine in Israel Malakom.

Addressing the hundreds of Arab sector businessmen who attended the conference, Al Wazir described the obstacles inhibiting the proper functioning of the Palestinian economy. "Ours is a small economy, operating in two separate territories. We have no control of the land, the water or the airspace. We are limited by road blocks and the [West Bank] separation barrier. The West Bank is divided into administrative areas [in line with the Oslo Accords], the largest of which, area C, is under Israeli control." Yet, according to Al Wazir, in the first quarter of 2012, the Palestinian economy in the West Bank has grown by almost 9 percent, while in Gaza, a remarkable economic growth of over 20 percent has been recorded, made possible following years of economic slump and even immobility under the Israeli blockade [which has been partially eased recently].

Al Wazir noted that notwithstanding all these difficulties, the Palestinians managed to form governmental agencies in anticipation of the establishment of a Palestinian state. The Palestine Monetary Authority headed by Al Wazir is in charge of outlining monetary policy and, according to Al Wazir, has at its disposal state-of-the-art tools. "We have been accorded worldwide support and recognition," Al Wazir said. He called on the Israeli Arabs attending the conference to invest in the Palestinian territories. "Our capital market is open to you and welcomes you, and there is a wealth of opportunities for joint ventures." 

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