The World Bank has approved a $30 million development policy grant to Palestine to support digital initiatives to strengthen its economy and improve governance.
The grant will help in easing the fiscal stress caused by the Covid-19 pandemic and the Israeli bombardment of Gaza.
Poverty among Palestinians in the densely populated Gaza Strip is expected to undergo a “dramatic increase”, the Washington-based multilateral lender said on Saturday.
Every second Palestinian in Gaza is currently living below the poverty line, according to World Bank estimates.
“With the continuation of the Covid-19 crisis and the impact of the 2021 Gaza conflict, the poverty rate is expected to have further increased,” the World Bank said.
The lender's announcement comes after the UN launched a snap appeal of $95 million to help Palestinians rebuild their lives after an 11-day conflict with Israel.
While reconstruction costs are expected to run into billions of dollars, the UN’s appeal aims to meet the short-term needs of Palestinians.
“The development policy grant offered by the World Bank will support the already fragile fiscal situation,” said Kanthan Shankar, World Bank country director for the West Bank and Gaza.
The grant will also be directed towards reconstruction and recovery efforts in Gaza, where healthcare infrastructure, including the strip’s only Covid-19 testing centre, was destroyed by Israeli air strikes.
“To help estimate these needs, the World Bank is partnering with the UN and the EU to undertake a rapid damage and needs assessment,” said Mr Shankar.
Before the latest Israeli bombardment on Gaza, the World Bank approved a four-year strategy for Palestine that is focused on protecting lives and creating jobs amid the pandemic.
Palestine’s economy shrunk by 11.5 per cent last year, one of the sharpest contractions on record, and only a modest recovery is expected this year as its overwhelmed healthcare sector struggles to deal with new infections.
The World Bank said earlier this year that it expects the Palestinian economy to grow by 3.5 per cent in 2021 after social-distancing measures affected the growth of the tourism and construction sectors, as well as parts of the service industry such as restaurants.
The estimates are likely to be revised because of further destruction of Gaza’s critical infrastructure by Israel.
The latest disbursement by the World Bank will support the Palestinian Authority’s five-year priorities under the 2017-2022 National Policy Agenda. The development policy grant will support reforms in building the foundations of a digital economy through the adoption of a modern telecoms and information technology law.
The programme will also support the setting up of e-payment companies and boost connectivity within Palestine.
The World Bank said last month that the government’s fiscal deficit of more than $1 billion, which is at its highest point in years, and declining government revenue would “depress investment and squeeze out urgent spending”.
The multilateral bank provided a $9m grant to Palestine's Innovative Private Sector Development Project in March to support start-ups and small and medium businesses through financial and technical assistance.
It also approved a grant of $20m to improve access to high-speed broadband services in Palestinian territories in the same month.