WASHINGTON, July 25 (RIA Novosti) – IMF spokesman William Murray said Thursday that the economic impact of the Israel-Hamas conflict on Gaza will depend on the duration of the fighting, but absent outside funding, the Palestinian Authority will not be able to bear the fiscal burden of the conflict.
“With the conflict ongoing, it is too soon to make an accurate assessment of the economic impact which is focused on Gaza and will ultimately depend on the conflict’s duration,” said Murray of the ongoing fighting between Israel and Hamas.
“Post conflict reconstruction poses risks to Palestinian Authority finances, absent additional donor financing,” said Murray. “The PA does not have fiscal room to take one this additional burden.” He continued, “Heavy damage to buildings, water and electricity infrastructure is already apparent, aggravating an already critical humanitarian situation.”
The IMF can only provide Palestine with economic policy assistance. Direct aid comes primarily from donor nations in the West. Israeli occupation of the West Bank and Gaza continues to be extremely costly. A 2013 World Bank study reported that the costs of the Israeli blockade of the West Bank alone, costs Palestinians approximately $3.4 billion per year, or 35 percent of its GDP.
Israel has also taken an economic hit from the conflict, though less harsh. According to various sources Murray stated, “The fiscal cost of the conflict over the past few weeks is estimated at 2 percent of GDP,” with tourism and small and medium size enterprises being hit hardest. “Once the conflict ends, we expect growth in Israel to rebound relatively quickly.”