PA Chairman Abbas
PA Chairman AbbasFlash 90

The International Monetary Fund (IMF) on Thursday called on Israel and the Palestinian Authority to help support the economy of Gaza and the PA-assigned areas of Judea and Samaria, where growth has been slowing and unemployment is rising.

“The economy is hobbled by persistent restrictions and increasing political uncertainty,” IMF staff said in a report quoted by Bloomberg news.

“Urgent actions are needed -- by the Palestinian Authority, by the government of Israel and by donors -- to stabilize the fiscal position and rekindle economic growth over time,” said the IMF.

The Washington-based IMF said it sees growth of five percent this year in the PA-assigned territories, compared with six percent last year and an average of about 11 percent in 2010-2011. It expects a “continuing downward trend in subsequent years,” the report said.

The Palestinian Authority needs to rein in its budget deficit with caps on spending commitments, according to the report, which also sees as “essential” an easing of Israeli restrictions on external trade, and the movement of goods and people in the region.

In a report six months ago, the IMF along with the World Bank warned that the PA faces a $400 million budget shortfall and risks “social upheaval.”

Protests over the economy in the PA later prompted Prime Minister Binyamin Netanyahu to order the transfer of a 250 million shekel advance to the PA from tax revenues collected by Israel, but the transfer of the tax funds was frozen in response to PA Chairman Mahmoud Abbas’s unilateral move at the United Nations.

Late last month, after PA Arabs rioted against Israeli security forces throughout Judea and Samaria, Netanyahu instructed Israeli authorities to transfer the PA its tax revenues for January, "so that they won't have an excuse not to enforce calm on the ground."

PA Prime Minister Salam Fayyad has several times warned the entity may soon fail financially and cease to exist because of its financial crisis, considered to be its worse since its founding.

In December the Arab League states pledged to pay the PA $100 million a month in a “safety net”. Saudi Arabia has indicated that it will contribute $20 million each month to the PA.