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Source: World Bank
8 October 2014

Document of The World Bank
Report No. 89503 GZ





FY 15-16

October 8, 2014


1. The World Bank Group's involvement in the Palestinian territories dates back to 1992 when it provided the blueprint for donors' subsequent involvement in the West Bank and in Gaza. The IFC began investing in the West Bank & Gaza (WB & G) after the 1993 and 1995 Oslo Accords, while MIGA initiated activities in 1997 with its West Bank and Gaza Investment Guarantee Trust Fund (IGTF).

2. This proposal for the World Bank Group's forthcoming engagement during the period FY 2015-16 has been developed jointly by IFC, MIGA and the World Bank. The last Interim Strategy (for the period FY 2012-14) was also a joint product of the Bank and IFC. During its implementation period, MIGA's program grew considerably—both in the West Bank and in Gaza. IFC's and MIGA's participation in the current strategy has enhanced its emphasis on private sector development.

3. Prolonged conflict and deep-seated uncertainty has required the World Bank to rely on occasional interim strategy notes rather than medium-term partnership strategies and frameworks. However, Executive Directors have reviewed the program regularly: twice in the intervening two years, in May 2013 and May 2014, the Board discussed the program's implementation in response to political and economic developments. The previous strategy was accompanied by a results monitoring framework, which the country team used to assess progress and to draw lessons of implementation experience that are summarized in this document.

4. In the highly unpredictable operating environment, institution strengthening to build the foundation of a strong Palestinian administration has been central to the Bank's program, while IFC has focused on the development of the financial and infrastructure sectors. The Bank has been assisting the Palestinian territories since 1994, with assistance fmanced from IBRD' s net income, with each transfer requiring the approval of the Board of Governors. Leveraging donors' funds, selective engagement and systematic follow-up on implementation have allowed continuity in the program: six development policy grants have supported the Palestinian agenda of public financial management and fiscal strengthening, while investment projects have helped develop the education, municipal, water and social protection sectors. Since 2008, IFC has invested US$269 million to support private firms in the financial and infrastructure sectors.

5. The Bank Group's response to the situation in Gaza is part of this Assistance Strategy. Hostilities began in early July 2014 and continued until the end of August. A cease-fire, announced in the end of August 2014, has provided the space to provide humanitarian assistance, initiate early recovery and plan international assistance for reconstruction. As the humanitarian numbers show, the latest conflict is more serious in terms of lives lost, physical destruction and productive losses than any previous conflict in Gaza. The World Bank Group (WBG) is supporting the recovery effort led by the Palestinian Authority (PA) and WBG response is closely coordinated with other donors. An aid conference, convened by the PA, Egypt and Norway is scheduled on October 12, 2014. A MIGA-supported project in Gaza has been damaged in the hostilities. Given its current foothold in the financial and infrastructure sectors in the West Bank, IFC will focus its Gaza reconstruction efforts in both of these sectors.

6. The Assistance Strategy will balance short-term stabilization and reconstruction activities with operations that serve as platforms for maintaining continuous dialogue with the PA and donors. This deliberate "twin-track" strategy permits a continued emphasis on longer-term development priorities (state building, service delivery and support for private sector-led growth) while also retaining the high degree of flexibility needed to respond rapidly to emergency and other immediate needs. In view of the limited financial envelope available, the World Bank will also continue to play a catalytic role among development partners using World Bank-supported operations as opportunities to leverage and coordinate additional donor co-financing.

7. The strategy outlined below is aligned with the Palestinian National Development Plan (2014-16) and the experience with the Bank group's previous (FY 2012-14) interim strategy. The first pillar remains centered on strengthening public institutions for state building and improving service delivery. The second pillar continues to be focused on private sector development—with an added emphasis on increasing employment opportunities (through supporting reforms that encourage job creation in the private sector.) The same elements that constrain economic growth in the Palestinian territories overall affect Gaza even more, with Gaza reconstruction initiatives falling within both pillars. The development of this strategy has been informed by upstream discussions with various parts of the Palestinian Authority, private sector representatives, civil society and with donor partners. Gender-informed interventions, introduced in the program during the implementation of the previous strategy, will be scaled up based on a gender action plan developed in FY 14.

Complete document in PDF format (Requires Acrobat Reader)

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