The Palestinian Authority’s (PA) financial situation remains precarious. As a result of rising unemployment, reduced demand and the Government of Israel’s withholding of taxes collected on the PA’s behalf, monthly revenues dropped from US$91 million in late 2000 to US$19 million today. A collapse of the PA has been avoided by donor budget support, which totals US$1.1 billion over the last two years. Seventy-five percent of this has come from Arab countries. The recent resumption of revenue transfer by the Government of Israel is a positive development.
With unemployment rising and incomes collapsing, over half a million Palestinians in this formerly middle-income economy are now fully dependent on food aid. Per capita food consumption has declined by 30 percent in the past two years, and the incidence of severe malnutrition recently reported in Gaza by Johns Hopkins University is equivalent to levels found in some of the poorer sub-Saharan countries.
The proximate cause of Palestinian economic crisis is closure ¯ the imposition by the Government of Israel (GOI) of restrictions on the movement of Palestinian people and goods across borders and within the West Bank and Gaza. Closure is viewed by GOI as regrettable but necessary in order to protect Israeli citizens from violent attacks.
With unemployment rising and incomes collapsing, over half a million Palestinians in this formerly middle-income economy are now fully dependent on food aid. Per capita food consumption has declined by 30 percent in the past two years, and the incidence of severe malnutrition recently reported in Gaza by Johns Hopkins University is equivalent to levels found in some of the poorer sub-Saharan countries.
The proximate cause of Palestinian economic crisis is closure ¯ the imposition by the Government of Israel (GOI) of restrictions on the movement of Palestinian people and goods across borders and within the West Bank and Gaza. Closure is viewed by GOI as regrettable but necessary in order to protect Israeli citizens from violent attacks.