World Bank warns of Gaza banks’ collapse

Author: 
Reuters
Publication Date: 
Sun, 2008-12-07 03:00

GAZA: The World Bank said yesterday Israel’s tightened blockade of Hamas-run Gaza had created cash shortages that could lead to the collapse of its banks.

Bank branches across the Gaza Strip have been shut since Thursday for lack of sufficient money to operate normally.

Israel has stiffened Gaza border closures in the past month as cross-border violence rose, choking off cash supplies.

“The ongoing closure of Gaza and severe restrictions on the flow of goods and people continue to be a cause of grave concern,” the World Bank said in a statement.

A “serious cash shortage had been caused by Israeli restrictions on the transfer of banknotes into Gaza,” the statement said.

“The liquidity crisis could lead to the collapse of the commercial banking system in Gaza,” it added, warning also that this could entail “serious humanitarian implications.”

Israel was urged “to move swiftly to restore cash liquidity in Gaza bank branches” before Muslim Eid Al-Adha.

Israel allowed dozens of truckloads of food and medical supplies into Gaza on Thursday, but it was unclear when it would let cash into the coastal enclave to replenish currency stocks.

Palestinian Prime Minister Salam Fayyad, whose Western-backed government is based in the Israeli-occupied West Bank, said this week that there was not enough cash in Gaza to cover salaries for more than 77,000 government workers.

Fayyad said 250 million Israeli shekels ($63 million) was needed to pay these salaries but Gaza’s banks had only 47 million shekels. Fayyad added that Gaza banks needs 100 million shekels monthly to ensure salaries are paid to employees.

Israel tightened its blockade of Gaza a year ago after Hamas wrested the territory from secular Fatah forces loyal to President Mahmoud Abbas.

It has tightened the closure further since a deadly raid by its forces on Nov.4, followed by a surge in rocket attacks by Gaza militants. The border closings have increased hardships for many of Gaza’s 1.5 million residents.

Meanwhile, the Palestinian Monetary Authority (PMA) said yesterday that a meeting with world financial and development institutions will take place to discuss exerting pressure on Israel to allow currency into Gaza.

On Thursday the PMA announced that all Palestinian banks in Gaza will be forced to shut down due to the authority’s inability to deliver funds to besieged Strip.

In a statement sent to the press, Jehad Al-Wazir, director general of the PMA, said that the funds are ready to be transferred, but due to Israel’s ban on sending funds to Gaza, the Authority is unable to ensure those funds. But on Friday evening news reports said that the banks will open on Saturday in order to pay 1,000 NIS as a partial payment for each employee.

— With input from Hisham Abu Taha

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