Ramallah- Palestinian Undersecretary of the Ministry of Economy, Manal Farhan, told Tel Aviv Tribune Net that the total losses of the Palestinian economy as a result of the cessation of production in the Gaza Strip and the repercussions of the Israeli aggression on the West Bank are estimated at about two billion and 300 thousand dollars since October 7, until the end of December 2023.
The Palestinian official added in an interview with Tel Aviv Tribune Net that the total number of establishments that stopped production or their production declined during the aggression exceeded 80,000 establishments, at a time when the number of unemployed people was estimated at about 651,000.
The following is the text of the dialogue with the Undersecretary of the Ministry of Economy, which also discussed the impact of the war on the abundance of food supplies and their prices, and the occupation’s continued detention of Palestinian tax funds since the beginning of the aggression.
Preliminary estimates
First, are there preliminary estimates of the losses in the Gaza Strip and Palestine in general, as a result of the ongoing Israeli aggression since October 7, 2023?
The value of Palestine’s losses during the ongoing Israeli aggression (October-December 2023) is estimated at about two billion and 300 thousand dollars, as a result of an almost complete cessation of production in the Gaza Strip and its repercussions on the West Bank, equivalent to about 25 million dollars per day, excluding losses. Direct ownership of property and assets.
What are the Palestinian economic sectors most affected by Israeli measures?
The added value of all economic activities in Palestine declined during the last fourth quarter of 2023 compared to the same quarter of 2022.
Construction activity recorded the highest decline rate, reaching 39% (27% in the West Bank, 96% in the Gaza Strip), followed by agricultural activity by 38% (12% in the West Bank, 93% in the Gaza Strip), then services activity by 33%. % (21% in the West Bank, and 77% in the Gaza Strip), and industrial activity by 28% (24% in the West Bank, and 92% in the Gaza Strip).
As a result, economic activities in Palestine declined on an annual basis during the entire 2023 compared to 2022, as construction activity recorded the highest decline of 12%, followed by agriculture and industry activities by 8%, and services activity by 6%.
The occupation has been working actively to destroy the economy in the West Bank since October 7th.
The matter is not limited to preventing workers from working inside the occupied territories and stealing clearing funds from the authority (the salaries of its employees), but the pace of demolition has increased in Area C. For example, the video of the demolition of shops and facilities in the Al-Muhalal neighborhood in the town of Ni’lin today. pic.twitter.com/ruxmZmecZF
— yaseenizeddeen (@yaseenizeddeen) December 20, 2023
80 thousand facilities were damaged
In the West Bank, how did the Israeli closures affect the economy and economic establishments, including companies that faltered or declared bankruptcy?
As a result of the repercussions of aggression; About 29% of the establishments in the West Bank were affected by a decline in production, or the cessation of production, at 35 thousand establishments.
While most of the establishments in the Gaza Strip stopped practicing their economic activity; As a result of the partial or total destruction of facilities, the total number of establishments that stopped production, or whose production declined, exceeded 80,000 establishments in Palestine.
As a result of the Israeli aggression, the gross domestic product is expected to decline by 6% in 2023.
The aggression measures also caused a decline in the performance of about 80% of economic establishments, while 75.6% of establishments suffer from difficulty in moving and distributing goods between the governorates of the West Bank.
Loss of cash flow
What are the government’s plans to confront rising unemployment, especially with workers being prevented from reaching their workplaces in Israel? What impact has this sector left on the economy of the West Bank?
The government is facing a financial and economic blockade that has caused it to be unable to fulfill its obligations, specifically paying the salaries of public employees and private sector dues.
Estimates indicate that there are more than 651,000 unemployed people in Palestine, including 393,000 in the Gaza Strip and 258,000 in the West Bank.
The unemployment rate is expected to reach 30% in 2023, up from 24% in 2022. Therefore, the government is making great efforts to design programs that enable workers – in particular – to establish small projects, especially in the agricultural sector.
It must be noted here that the Palestinian market loses more than 250 million shekels ($67 million) each month. As a result of the inability of workers to work inside Palestine (Lands 48), this caused the loss of one of the sources of cash liquidity in the market, and a sharp decline in purchasing power.
Food supply
In terms of food supplies, how did the war and Israeli measures affect their arrival to the citizens of the West Bank?
The problems – especially in the first month of the aggression – focused on seizing part of the goods in Israeli ports, and increasing the duration of inspection and security checks, which resulted in additional costs in storage or flooring, in addition to transferring part of the goods from the port of Ashdod to the port of Haifa. This increases the transportation cost.
In addition to the above, the value of marine insurance increased, and the average increase in transportation costs reached 15% compared to the situation before the aggression, while the average increase in flooring and storage costs reached 22%, compared to a 57% increase in insurance costs, and all of this caused problems. For 60% of food importers in the import process from countries around the world.
I would like to point out here that the occupation authorities impose a siege on the cities of the West Bank, and its measures have led to the dismemberment of their parts and the difficulty of movement of people and goods between the various governorates, and therefore most importers face problems in the distribution process. As a result of these measures, such as closing roads, erecting checkpoints, and storming Palestinian cities and communities.
Commercial vehicles were also subjected to many terrorist attacks by settlers, during the process of transporting and distributing goods between the governorates of the West Bank.
The Ministry of Economy, in coordination with the private sector and major importers, maintained the flow of goods and the food supply chain to the market, and increased the amount of imported foodstuffs, as the Ministry issued more than 5,000 import licenses over a period of 3 months (October – December 2023). ).
Clearing deductions
On January 8, Prime Minister Dr. Muhammad Shtayyeh announced that during last December, Israel deducted 517 million shekels (about 138 million dollars) from the clearance funds, which amounted to 750 million shekels (about 200 million dollars) for the second month in a row. It was rejected. What is the impact of the detention and deductions from tax funds that the occupation collects at the crossings on behalf of the authority (the clearing house) on the government’s performance and role?
Israel’s piracy of clearing funds is illegal, political blackmail, and part of the financial and economic pressure on the Palestinian people.
This piracy exacerbated the financial and economic situation, which limited the government’s ability to fulfill its financial obligations to the public and private sectors. This led to a decline in the performance of economic activity and commercial activity in the various governorates of the country, in addition to the sharp decline in external support.
In light of this blockade, we call on the Arab countries to activate the Arab safety net to confront the occupation’s piracy of our people’s money from tax dues, noting that the government was forced to take a combined loan according to which 65% of the salary for the month of November 2023 was disbursed, and 14% of the salary was disbursed. The balance of the accumulated arrears for employees, the disbursement of the value of the 50% advance that was disbursed from the banks to the employees for the month of last October, and in general, the financial situation is extremely difficult.
Finally, what about the data related to debt defaults, including loans and checks, and the reality of the banking system?
We monitored an increase in the value of returned checks in October 2023, reaching $240.8 million, up from $97.7 million in the previous September.
The Palestine Monetary Authority issued instructions to banks with the aim of reducing the effects of the scarcity of liquidity in the national economy, and helping individual and corporate borrowers to address the effects of the cessation of income, or the decline in the volume of cash flows due to the war, in a way that protects their credit ratings. In general, the banking system in Palestine is strong and solid, and has the financial solvency necessary to face various challenges.