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Source: World Bank
18 April 1997



West Bank and Gaza Gets Boost From IDA



The World Bank on April 8 approved two separate International Development Association (IDA) credits to support a Palestinian Authority housing project and to encourage private sector investment in the West Bank and Gaza.

The $25 million (equivalent) IDA credit for the housing project will set up financial mechanisms for long-term development of the housing sector.

Under the project, a private shareholding company, the Secondary Mortgage Facility (SMF), has been established to provide capital to help commercial banks manage risks by refinancing their long-term mortgage loans. The project will also establish a fund which will share a portion of the credit risk. In a market that is primarily cash-only, those plans are expected to improve Palestinians' access to more affordable housing. In the densely populated Gaza Strip, it is estimated that one third of Palestinian households have at least 3 people per room.

In addition, the housing project will encourage production of lower-cost housing by supporting private developers through a partnership with the Ministry of Housing. A demonstration site in Gaza City is planned, allowing private developers to bid for the right to design, build and market less expensive housing units.

The $10 million (equivalent) IDA credit will support private sector investment in the West Bank and Gaza by providing insurance to investors against political risks, including war, expropriation and inconvertibility. The credit amount will go through the Palestinian Authority for a proposed Investment Guarantee Fund, managed by the World Bank Group's Multilateral Investment Guarantee Agency (MIGA).

Private sector development in the Palestinian territories has stagnated and providing private investors with protection against noncommercial risks is one way to help spur foreign investment.

The Fund's capital base, expected to total $50 million, will be made up of cash contributions and promissory notes from donor countries and multilateral institutions. For more information, call Jeannie Yamine, (1-202) 473-2318, fax 522-0003, or e-mail jyamine@worldbank.org.


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