|World Bank statement on Gaza cash crisis|
Delivered at an emergency meeting called by the Palestinian Monetary Authority (PMA) in Jerusalem on December 6, 2008
The ongoing closure of Gaza and severe restrictions on the flow of goods and people continues to be a cause of grave concern to the World Bank because of the serious economic and humanitarian impacts. This situation has been compounded by the serious cash shortage in Gaza due to Israeli restrictions on transfers of banknotes from banks' branches in the West Bank to branches in Gaza.
The liquidity crisis could lead to the collapse of the commercial banking system in Gaza, further undermine the role of Palestinian institutions, and have serious humanitarian implications. The cash shortage is already:
- seriously constraining the PA's ability to pay salaries and provide basic services in Gaza;
- making it difficult for the Gaza population to purchase food and other basic necessities, particularly ahead of next week's holiday;
- hampering the ability of the already devastated Palestinian private sector to function;
- threatening the survival of the banking system in Gaza and forcing people to use informal markets where it is difficult to enforce anti-money laundering measures maintained by the Palestinian Monetary Authority;
- impeding donor-financed humanitarian and development operations.
A collapse of the Gaza banks, in addition to the immediate term economic impact, will make future recovery and development efforts much more difficult. Positive resolution is dependent on transfer of banknotes and we urge the GOI to move swiftly to restore cash liquidity in Gaza bank branches prior to the Eid holiday on Monday.