Unprecedented Shocks Hit the Palestinian Economy
WASHINGTON, February 21, 2024 – The World Bank Group announced a $30 million grant to help ensure the continuity of crucial education for children. A sharp decline in economic activity, including trade, coupled with a lack of clearance revenues since October 2023, has worsened an already acute fiscal crisis, thus severely impacting the delivery of public services. This grant will contribute to the education sector to help ensure that learners don’t miss out on essential education.
With 40% of the population under the age of 15, education is one of the largest public sector expenditures in the West Bank. The precipitous drop in revenues has resulted in wages being reduced or postponed for public sector employees. Salary payments to teachers have dropped by almost half since October.
The World Bank Group has issued its latest analysis on the economic impact of the conflict on the Palestinian economy, which covers both the West Bank and Gaza. The Palestinian economy has experienced one of the largest shocks recorded in recent economic history, with the GDP in Gaza plummeting by over 80% in Q4 2023, and by 22% in the West Bank during the same period.
Poverty was already high in Gaza before the conflict, with more than half of households relying on aid as the primary source of income. At present, almost every resident in Gaza now lives in poverty and faces acute food insecurity. Poverty levels are on the rise also in the West Bank, due to a marked economic slowdown and constrained fiscal capacity, which affects the effectiveness of social protection programs. Overall, poverty levels in the Palestinian territories at the close of 2023 are anticipated to surpass those in 2020, during the peak of COVID-related restrictions.
In addition to the $30 million grant for education in the West Bank, on December 12th, 2023, the World Bank Group announced $35 million in grants to support the emergency delivery of food, water and health services for the affected people of Gaza. The financing is governed through robust fiduciary procedures that ensure resources reach people and are utilized for the intended purpose.
The World Bank Group’s work in the West Bank and Gaza is aligned with our mandate to remain actively engaged in fragile and conflict settings, supporting people in the most challenging circumstances while building the foundations of development that are essential to ending poverty on a livable planet.
