Publication: Public Expenditure Review of the Palestinian Authority: Policy Priorities Amid a Spiraling Fiscal Crisis
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2025-06-12
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2025-06-12
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Just like every other socio-economic dimension, also the fiscal situation in West Bank and Gaza is shaped by its fragility, conflict and violence (FCV) context. It is difficult to overstate the impact that the Israeli occupation imposes on the economy of the West Bank and Gaza. Along with the recurrent violence,the most important obstacles to Palestinian growth and private-sector development continue to be the Israeli restrictions on movement, economic activity, and access to resources in the West Bank, and the near-total blockade of Gaza since 2007. As such, these factors fundamentally undermine the macroeconomic foundations needed to achieve fiscal sustainability. These constraints are amplified by Israel’s control of the Palestinian borders and of vast swathes of its territory (Area C) which greatly limit the Palestinian ability to collect taxes and conduct an independent and sound fiscal policy. These limitations, in addition to the internal political divide between the West Bank and Gaza, cause the Palestinian Authority (PA) to face a situation of permanent fiscal emergency. Fiscal revenues are structurally unable to cover the large public expenditures needed to maintain the economy and the society afloat. Hence the PA has to rely on foreign aid in order to bridge the financing gap.
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“World Bank. 2025. Public Expenditure Review of the Palestinian Authority: Policy Priorities Amid a Spiraling Fiscal Crisis. © World Bank. http://hdl.handle.net/10986/43330 License: CC BY-NC 3.0 IGO.”
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