The Portland Trust Palestinian Economic Bulletin
The Portland Trust publishes a monthly bulletin with the Palestinian Economic Policy Research Institute (MAS) on the Palestinian economy. The monthly bulletin covers the latest economic developments affecting the West Bank and Gaza Strip (WBGS) and includes key indicators such as unemployment figures, new business starts, consumer prices, and statistics indicating the vigour of banks operating in the WBGS. Long-term trends, such as demographic statistics or changes in public sector employment, are covered when relevant. The bulletin reports major events affecting the economic and business environment of the WBGS, such as mergers and acquisitions, bankruptcies, changes in business law, changes in company leadership, and political developments. The bulletin presents an analysis of the economic indicators and news, and focuses on their implications for business and for the Palestinian economy.
For past issues (2006/2007), please click
Issue 26 - November 2008 
Main reports: The Palestinian Authority (PA) finalised its arrears payments in October. By mid-September, $1.34bn had been transferred in direct budget support in 2008 (30% more than was pledged at the 2007 donor conference in Paris).
The Al-Ersal project was officially launched in October. The project is a multipurpose business complex on 50,000m² near the city centre of Ramallah. The project will be financed by the Land Holding Company, set up by the Palestine Investment Fund (PIF) and the Holy Land Company. It has capital of $45m and expected investment of $200m.
According to the Finance and Insurance Survey in the Palestinian Territory for 2007,
the financial sector’s total value of output was $386.5m, an increase of 29.4% from
2006. Gross fixed capital formation (a measure of new investments) was $23.5m, net taxes on production $28.3m, and operating surpluses (a proxy for pre-tax profits)
were $128.3m. Read more
Issue 25 - October 2008
Main reports: A follow up to the Bethlehem Palestine Investment Conference will take place in Nablus on 21-23 November. 100 international investors are expected to participate, as well as local businesses, academia and government officials.
Megapharm announced that they face closure as the imports of raw materials,
sourced internationally and locally, are restricted into the Gaza Strip. Megapharm is
the last pharmaceutical outfit operational in Gaza; The Al Aqsa Fund approved $15m this month for projects and relief assistance in Gaza.
Palestinian economic performance rose by 0.7% in Q2 2008 from Q1 2008 and fell
by 3.2% from Q2 2007. Gross Domestic Product (GDP) per capita in the Palestinian
Territory was static compared with Q1 2008 at $285.5 per quarter. This is 5.2% lower than Q2 2007 figures.
The PCBS Labour Force Survey for Q2 2008 showed that unemployment, according to the ILO definition, increased from 22.6% to 25.8% from the previous quarter. The survey highlighted the increasing disparity between the West Bank and the Gaza Strip. Unemployment fell in the West Bank from 19.0% to 16.3% but rose in the Gaza Strip from 29.8% to 45.5%.Read more
Issue 24 - September 2008
Main reports: The Ministry of Planning, in consultation with other PA bodies and the Sector Working Groups, has produced an Aid Effectiveness Action Plan for 2008 - 2010, which (subject to Cabinet approval) is likely to be presented at the Ad Hoc Liaison Committee of international donors meeting in New York on 22 September.
The Palestinian Business Environment is on a par with countries such as India and
Indonesia, according to the World Bank’s recently published Doing Business Report 2008.
The recent export of medical herbs by the Sinokrot Global Group (SGG) is the first
Palestinian fresh agricultural product to enter the American market since 1967.
The PA announced the launch of a $30m Islamic microfinance component of the
“Deprived Families Economic Empowerment Programme” (DEEP). It will be financed by the Islamic Development Bank and administered by the UNDP with the cooperation of the PA.
Business confidence has remained steady over the summer months. The regular
PCBS survey of industrial establishments found that the percentage of Palestinian
businesses expecting production to rise over the medium term (six months) was 8.8% higher than those expecting a decline. Read more
Issue 23 - August 2008
Main reports: Dr. Jihad Alwazir, Governor of the Palestinian Monetary Authority (PMA) confirmed that the goal of establishing a Palestinian Central Bank in 2010 is on track.
The Bank of Palestine (BOP) signed a strategic partnership with the International Financial Corporation (IFC) at the end of July. The IFC will invest $15m, acquiring 5% of the bank’s equity (approximately five million shares).
On a recent visit to the Palestinian Territory, British PM Gordon Brown announced $60m for economic development, half of which has been dispersed for direct budget support. This will result in the UK providing $175m to the PA in 2008.
Japan hosted the third ministerial-level meeting of the four-party consultative unit for the “Corridor for Peace and Prosperity”, which plans to start at the beginning of 2009. The “Corridor” will enable collaboration between the Palestinians, Israelis and Jordanians on regional projects and is expected to provide more than 6000 jobs. Read more
Issue 22 - July 2008
Main reports:The PMA has introduced new networking technology that will improve the Palestinian banks’ lending process and credit approval systems. The new system gives banks immediate access to a client’s credit history anywhere in the
West Bank and Gaza Strip.
The International Finance Corporation (IFC) and the Palestinian Education Fund
(PEF) are to launch the first Palestinian private student loan facility, providing up to
$10m for approximately 8,000 students annually for four years.
The World Bank will provide $12m towards the $140m Electric Utility Management Project, which aims to improve electricity operating efficiency in the Palestinian Territory.
The Gaza Chamber of Commerce reported that its economy lost over $1bn since June 2007. The report reveals that during the last two years, over 3700 plants and trade companies have shut down and more than 65,000 Palestinians have been made unemployed. Read more
Issue 21 - June 2008
Main reports: The Watan Company for Development and Investment was launched at the Palestine Investment Conference. The holding company has an initial $100m for investment (slated to increase to over $500m) and plans to open three factories
producing cement, iron and YTONG bricks. Watan also plans to merge two Palestinian banks.
In the first Palestinian pharmaceutical consignment to Europe, Pharmacare or Dar
Al-Shifa exported 2.4 million capsules of Tramal (an opioid painkiller) to Germany, following its award of the European Good Manufacturing Practice certificate in January by the German Ministry of Health.
The EU will provide €3.7m to settle the outstanding bills of 94 small and medium sized companies servicing the PA. The financial support will be administered by the EU financing mechanism PEGASE.
The PA and the European Commission formally re-launched the European Neighbourhood Policy (ENP) process in May, upgrading bilateral ties and furthering
EU support for the future sustainable Palestinian state. Read more
Issue 20 - May 2008
Main reports: Representatives of the private sector met Prime Minister Fayyad and other PA Ministers on 23 April, as part of an ongoing dialogue between the sides to
improve the business climate in the Palestinian Territory.
Palestinian companies are to put forward proposals to build up to 10,000 new hotel
rooms in East Jerusalem, Bethlehem and Jericho over the next three years.Projects worth nearly $300m will be presented at the Palestine Investment Conference.
Following March’s court victory over unpopular measures to enforce the payment of utility bills, the trade unions reached a formal agreement with the PA in April to end the strikes protesting this move.
Palestinian companies reported healthy profi ts for the first quarter of 2008, with 26 out of the 33 PSE listed fi rms that disclosed their results ending March in the black. Of the fourteen biggest Palestinian companies, only one posted a loss in the first quarter. Read more
Issue 19 - April 2008
Main reports: Initial estimates of national accounts for 2007, issued by the PCBS at the beginning of April, show annual GDP rising by 0.7% reaching $4.136bn.
Following the census revised population figures, the per capita GDP emerges as $1,178 in 2007.
The 2008 Budget was approved by the Cabinet on 31 March, and awaits the
signature of President Abbas. The total budget is worth $3.34bn, by far the largest budget ever.
The PA was made to back down on its threat to cut salaries and refuse government services without proof being provided that utility debts had been paid.
The Palestinian Network for Small and Microfi nance released its figures for MFI activity in 2007. These show that 12,828 loans were disbursed during the year, which brings the total number made to nearly 225,000, worth $263m. 58% of the total value of the loans was distributed in the Gaza Strip, although 83% of 2007’s loans went to the West Bank. Read more
Issue 18 - March 2008
Main reports: The value of total banking deposits in the Palestinian Territory grew by 22% reaching $5.7bn: the majority were client deposits ($5.12bn, up 22%). The credit-todeposits ratio fell from 45.3% to 34.4%.
The International Finance Corporation signed an agreement with the Capital Markets Authority to develop the Palestinian Leasing Market. The IFC also signed a trade finance agreement with the Al Rafah Microfi nance Bank to become an issuing bank in the IFC Global Trade Finance Programme.
The value of exports rose by just over 1% to reach $339m. Imports were worth $2,835m. 74% of imports came from Israel, which was also the destination for almost 90% of Palestinian exports. The total value of trade with the European Union fell by 15% to $228m, almost all imports, while trade with the US declined 35% to $23m - 90% imports. Trade with Arab countries increased to $100m in 2006, with Palestinian exports worth $34m.
Palestinian companies released their preliminary financial data showing improved pre-tax profi ts in 2007. Of the 35 firms on the Al-Quds index, all but nine reported profits and 24 did better than in 2006. Read moreRead more
Issue 17 - February 2008
Main reports: A draft of the new Company Law, which aims to provide a unified framework for Palestinian fi rms in the West Bank and Gaza, has been presented at a Ramallah workshop on 2 February. The draft is expected to be finalised before the
Bethlehem Investment and Development Conference in May.
The Portland Trust, together with the private sector and the PA, has developed a $1bn affordable housing programme. The programme aims to build 15,000 housing units in six new communities in the West Bank. International donor
support of $150m is now needed for infrastructure and public services.
Gazans spent an estimated $130m in Egypt following the border breach on 23 January.
Public sector strikes have broken out to protest the new measures by the PA designed to reduce the debt resulting from the poor collection of electricity
bills. The Jerusalem District Electricity Company is owed approximately $90m.
The Consumer Price Index rose by nearly 1% in December. Read more
Issue 16 - January 2008
Main reports:
BG ends negotiations with Israel over the supply of Gaza’s natural gas. The pricing issue was the primary deal breaker.
Pre-paid collection systems will replace existing electricity meters in all Palestinian households. With the introduction of the pre-paid meters, as well as other measures, The PA hopes to reduce the cost of net lending (primarily due to the poor collection of electricity bills) from 10.6% of GDP in 2007 to 7.8% in 2010.
The Ministry of Telecommunications announced 15 new Broadband and VOIP licences; a Trade Promotion project is launched by PalTrade, the Palestinian
Shippers’ Council and the European Commission.
The agricultural sector increases its value-added by 36.5%, reaching $557m in 2005/2006. Read more
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