Palestinian economy not ready for statehood: WB

The Palestinian economy is not yet strong enough to support a sovereign state and officials need to lower costs and increase efficiency, the World Bank said in a report yesterday.
"The Palestinian Authority (PA) has made steady progress in many years towards establishing the institutions required by a future state but the economy is currently not strong enough to support such a state," said a statement accompanying the report.
"Economic sustainability cannot be based on foreign aid so it is critical for the PA to increase trade and spur private sector growth," he added.
The PA says it is facing its worst financial crisis since it was founded in 1994, with debts of $1.5 billion and an immediate cash shortfall of $500 million.
Saudi Arabia last week pledged an emergency $100-million donation after Palestinian president Mahmud Abbas visited the kingdom and appealed for help.
"While the Palestinian Authority has had considerable success in building the institutions of a future state, it has made less progress in developing a sustainable economic base," said the 181-page report.
"The Government of Israel's security restrictions continue to stymie investment and the recent growth has largely been driven by donor aid. This situation is unsustainable and aid levels have already begun to fall."
"However, there are a number of areas where the PA can focus its attention to not only improve current performance, but to lay the groundwork for a future state," it said.
"A future Palestinian state should seek to emulate Asian countries that have managed to sustain high levels of economic growth by adopting an outward orientation and integrating into world supply chains."