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        United Nations Conference on Trade and Development
8 July 2013

Original: English

Trade and Development Board
Sixtieth session
Geneva, 16–27 September 2013
Item 11(b) of the provisional agenda
Report on UNCTAD assistance to the Palestinian people

Executive summary

    With the persistence of Israeli restrictions on mobility in the Occupied Palestinian Territory,* loss of land and productive resources and bleak political prospects, gross domestic product (GDP) decelerated, and poverty and unemployment increased in 2012. These conditions are expected to deteriorate further. The Palestinian fiscal crisis deepened, owing to less aid and Israel's withholding of Palestinian revenue, posing risks to the whole economy. The crisis is exacerbated by the leakage of Palestinian fiscal revenues from smuggling and lost tax on imports via Israel. Stemming this leakage, estimated at $300 million annually, would expand Palestinian fiscal policy space, with a broader, positive impact on the economy, employment and poverty.

    UNCTAD continues to respond positively to the emerging needs of the Palestinian people. However, securing extrabudgetary funding remains critical to achieving the Doha Mandate of supporting the efforts towards building an independent Palestinian State.

* The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the United Nations Secretariat concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delineation of its frontiers or boundaries. In accordance with the relevant resolutions and decisions of the General Assembly and Security Council, references in this report to the Occupied Palestinian Territory or territories pertain to the Gaza Strip and the West Bank, including East Jerusalem. Use of the term Palestinerefers to the Palestine Liberation Organization (PLO), which established the Palestinian Authority. References to the State of Palestineare consistent with the vision expressed in Security Council resolution 1397 (2002) and General Assembly resolution 67/19 (2012).

I. Adverse economic and political horizons

A. Constraints on demand and supply B. Occupation and settlement make development unattainable
C. High unemployment, inflation, lower wages and poverty

D. Closure policy undermines human capital formation E. Squeezed tradable goods sector, persistent trade deficit and dependence F. The mirage of Palestinian fiscal sustainability G. The real economy and the ramifications of the fiscal crisis
H. Donor support is necessary but not sufficient
II. Palestinian revenue leakage continues
A. Leakage from direct and indirect imports and smuggling

B. Employment and output cost of fiscal leakage

C. Recommendations for stemming fiscal leakage

III. UNCTAD assistance to the Palestinian people

A. Framework and objectives

B. Operational activities under way C. Coordination, harmonization and resource mobilization


Notes 1B’Tselem,
2 Jerusalem Post, 10 June 2013 (­spike-176-percent-in-1st-quarter-of-2013-315986). See also Office for the Coordination of Humanitarian Affairs (OCHA), 2012.
3 According to the 1993 Oslo Accord, the West Bank is divided into Areas A, B and C, representing 18 per cent, 21 per cent and 61 per cent of the West Bank area, respectively. Israel retains extensive control in Area C, including over security, planning and zoning. Area A is under civil and security control of the Palestinian Authority. Area B is supposed to be under Palestinian civil control and joint Israeli-Palestinian security control.
4 Signed in Paris in April 1994 and annexed to the Israeli-Palestinian interim agreements of that year.
5 Seigniorage is net public revenue derived from issuing a currency, i.e. the difference between the face value of currency issued and its production and circulation costs. A government can raise seigniorage revenue without inflationary consequences if the increase in money supply is in line with economic growth and demand for money.
6 Unlike VAT, which is imposed on most products, a purchase tax is imposed on the consumption of some products: those that are imported or produced domestically. According to the Paris Protocol, the purchase tax on Palestinian imports from Israel that are subject to this tax should be transferred to the Palestinian Authority.

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