The World Bank and International Monetary Fund warned Saturday that Gaza banks could collapse in the near future. The banks are suffering from a shortage of Israeli currency, which is still commonly used in Gaza despite the Israeli "Disengagement" from the area in 2005.
Gaza banks began closing last Tuesday. Banks have not yet announced whether or not they will open again on Monday.
Israel has forbidden money transfers to Gaza in response to the Hamas takeover of the area. Limited funds have been allowed through in order to pay the salaries of employees loyal to the Fatah-led Palestinian Authority based in Ramallah.
Gaza leaders say over 75,000 PA workers will not receive their salaries due to the shortage of shekels. Banking officials said they had only 47 million shekels left, and need 220 million shekels in order to pay the salaries.
The employees most affected by the shortage are those paid by the Fatah-led PA. Those paid by the Hamas-led breakaway PA in Gaza receive their salaries on a regular basis. The salaries are apparently paid using money smuggled into the area via a series of tunnels under the border city of Rafiah.
Gaza analysts said Saturday the shortage was caused by agreements requiring Gaza importers to pay their Israeli business partners in shekels. Importers have given hundreds of millions of shekels in cash to their Israeli partners, much of it in advance, they said.
Gaza banks need approximately 400 million shekels in cash each month in order to counterbalance the currency flow to Israel and remain open, the analysts said.
Analysts have rejected theories that the Gaza tunnel trade was a factor in the shortage. Smugglers using the tunnels conduct their business primarily in U.S. dollars, they said, making the connection to the shekel shortage tenuous at best.
The World Bank urged Israel to solve the problem by allowing cash to be transferred to Gaza banks. The transfer should be approved before the Muslim holiday of Eid ul-Adha on Monday, they said.
Israel has not yet responded to the World Bank and IMF report. In the past, ministers have said the cash flow to Gaza will resume when Gaza terrorists stop firing rockets at Israel.