The Palestinian economy is not yet strong enough to support a sovereign state because of its heavy reliance on foreign aid, according to a World Bank report.
“The Palestinian Authority has made steady progress in many years towards establishing the institutions required by a future state, but the economy is currently not strong enough to support such a state,” economist John Nasir said in a statement accompanying the report, which was released Wednesday.
The PA says it is facing its worst financial crisis since it was founded in 1994, with debts of $1.5 billion and an immediate cash shortfall of $500 million, the French news agency AFP reported. Donor countries have propped up the Palestinian economy with billions of dollars in assistance.
In the report, the World Bank said the aid has led to 7.7 percent gross domestic product growth between 2007 and 2011, but only in government services, real estate and other non-tradeable sectors.
“Economic sustainability cannot be based on foreign aid,” the Nasir statement said, “so it is critical for the PA to increase trade and spur private sector growth.”