The Palestinian economic monitoring report will be presented to the Ad Hoc Liaison Committee (AHLC) during a virtual meeting on February 23, a policy-level meeting for development assistance to the Palestinian people.
It highlights critical challenges facing the Palestinian economy and describes the impact of covid-19 on the health sector and the policy measures adopted.
According to the report, the impacts of covid-19 continue to hit hard an already faltering Palestinian economy, resulting in an expected contraction of the Gross Domestic Product by 11.5 percent in 2020, one of the most severe declines on record.
Even before covid-19 struck, the outlook for the Palestinian economy was bleak with low growth levels, persistent fiscal deficits, high unemployment rates, and growing poverty.
The situation worsened with the combined effects of the pandemic and the cessation of clearance revenues (import taxes collected by Israel on behalf of the Palestinian Authority), leading to one of the sharpest contractions in economic activity.
"The covid-19 pandemic and its impacts exacerbated an already difficult and worrying situation for the Palestinian economy in 2020. As the pandemic becomes even more prolonged, the additional strains on the fragile socio-economic and health systems make it much harder to effectively deal with the crisis. The challenges in rolling out covid-19 vaccines add further uncertainty for the Palestinian people and economic recovery," said Kanthan Shankar, World Bank Country Director for West Bank and Gaza, in a press release on Monday.
As the covid-19 pandemic worsened in both the West Bank and Gaza, it revealed pre-existing weaknesses in the Palestinian health system, long affected by protracted conflict, limited budgets, and fragmented governance and service delivery challenges. The Palestinian territories have one of the lowest testing rates in the region and the positivity rate of over 21 percent indicates an uncontrolled spread of the pandemic, according to WHO guidance.
The pandemic has severely disrupted financing for other essential health services, such as maternal and child health, as well as non-communicable diseases. The suspension of coordination with Israel significantly disrupted outside medical referrals for life-saving treatments in Israel that are lacking in the Palestinian territories.
The Palestinian Authority expects to vaccinate 20 percent of the population with free doses supplied under the international Covax program, backed by the WHO. The Palestinian Ministry of Health plans to procure additional vaccines to achieve coverage of 60 percent of the population. Estimates on covid-19 vaccine purchase and deployment cost suggest that a total of about US$55 million would be needed to cover 60 percent of the population, of which there is an existing gap of $30 million. So far, the Palestinian Authority has received fewer than 20,000 doses of vaccines. While Israel has been leading the world in terms of per capita vaccinations, the Israeli Ministry of Health has not formulated an allocation strategy to support the territories, beyond providing 5,000 vaccines for Palestinian doctors.
"The Palestinian health sector faces significant challenges, and in times of covid-19, improved coordination between the West Bank and Gaza, as well as between the Palestinian Authority and Israel, would serve as a regional public good in combatting the virus and ensuring recovery of the economy. It is also in the benefit of all to ensure high vaccination coverage rates," added Shankar.