The World Bank approved a $30 million Development Policy Grant (DPG) to support the digital foundations of the Palestinian economy, strengthen recovery and resilience post-COVID-19, and improve governance and transparency in the public sector.

“The development policy grant will constitute valuable support to the already challenging fiscal situation, now being hit by the recent conflict in Gaza. This new grant will help alleviate the additional burden associated with Gaza’s needs for reconstruction and recovery. To help estimate these needs, the World Bank is partnering with the United Nations and the European Union to undertake a Rapid Damage and Needs Assessment,” said Kanthan Shankar, World Bank Country Director for West Bank and Gaza.

The $30 million grant will provide much needed financing to ease some of the fiscal stress caused by the COVID-19 pandemic, recently exacerbated by the conflict in Gaza, said a World Bank press release. Projections suggest a dramatic increase in poverty in 2020, leaving every second Gazan below the poverty line. With the continuation of the COVID-19 crisis and the impact of the 2021 Gaza conflict, the poverty rate is expected to have further increased.

With that background, the new program will support the Palestinian Authority (PA) to achieve selected strategic priorities outlined in the National Policy Agenda 2017-2022. The new DPG is based on the PA’s reform program to ensure full ownership in all areas of reform and supports the Bank’s twin goals of ending poverty and boosting shared prosperity.

In a first for DPG operations, this grant supports reforms in a new area that focuses on building the foundations of a digital economy through the adoption of a modern telecoms and information technology law, and the operationalization of e-payment companies. These reforms will boost connectivity within the Palestinian territories and beyond, notwithstanding the current constraints on the movement of goods and people.

Given that the Palestinian territories have been greatly affected by the COVID-19 outbreak, the DPG supports reforms that the PA has adopted to facilitate recovery while also ensure stronger resilience in the face of future pandemics through reforms in the health, social, and water sectors. For example, the operation supports the rollout of an online system to facilitate access to social assistance to the poor and vulnerable affected by the COVID-19 crises. While encouraging easy access to the tool, the PA has made efforts to maintain high levels of transparency by ensuring that beneficiaries of the online registration system do not receive assistance through any other channels.

The third part of the program builds on reforms supported by previous operations, especially in the areas of governance and transparency, through supporting the PA’s efforts to continue improving the quality of public procurement practices, strengthen controls on the public wage bill and increase the transparency of medical spending.

“The new grant builds upon efforts supported by previous operations to secure continuity of reforms and serve the governance and transparency agenda. It also takes into consideration political economy aspects that impact the prioritization of reforms,” added Nur Nasser Eddin, World Bank Senior Economist.