38026 TRUST FUNDFORGAZA AND WEST BANK STATUSREPORT WEST BANKAND GAZA COUNTRY MANAGEMENT UNIT November20,2006 CURRENCY EQUIVALENTS (Exchange rate as ofNovember 17,2006) Currency Unit:New Israeli Sheqalim (NIS) US$1=NIS 4.32 FISCAL YEAR January 1to December 31 ABBREVIATIONSAND ACRONYMS AMA Agreement onMovement andAccess. CPPR Country PortfolioPerformance Review FAP Fiduciary Action Plan FMR FinancialMonitoringReports GO1 Government o f Israel IDA InternationalDevelopment Agency PA PalestinianAuthority PLO Palestine Liberation Organization TFCA Trust FundCredit Agreements TFGWB The Trust Fund for Gaza and West Bank TFPI Task Force for Project Implementation TIM Temporary InternationalMechanism UNRWA UnitedNations Refugee andWorks Agency WB&G West Bank and Gaza RegionalVice President Daniela Gressani Country Director DavidCraig Country ProgramCoordinator Markus Kostner Operations Officer Hege Wade 2 TRUSTFUNDFORGAZAANDWESTBAhX STATUSREPORT TABLE CONTENT OF INTRODUCTION ................................................................................................................................................ 4 CURRENTCONTEXT ......................................................................................................................................... 4 THETRUST 6 ACTIVITIES IMPLEMENTEDSINCETHE2003 STATUSREPORT.......................................................................... 8 FWD FORGAZAAND WEST BANK............................................................................................... CURRENTPORTFOLIOSTATUS ....................................................................................................................... 11 LISTOFTABLES TABLE1.TRUST TABLE2.LEVERAGING FUNDS FUNDFORGAZAANDWESTBANKSUrYrMARY...................................................................... 78 DONOR ............................................................................................................ TABLE3.STATUSOF CURRENTPORTFOLIO ................................................................................................... 11 TABLE4.PORTFOLIOINDICATORS ................................................................................................................. 12 LISTOFBOXES BOX 1 STATUS OF IMPLEMENTATIONOF THE 2003 STRATEGY . ..................................................................... 10 LISTOFANNEXES ANNEX1.OPERATIONSINWESTBANKAND GAZASINCETHEPROGRAM'S INCEPTION................................. 14 ANNEX2.SUMMARY OFCOMPLETEDPROJECTSSINCETHE2003 STATUSREPORT ....................................... 15 ANNEX3.SUMMARY OFCOMPLETEDM A SINCETHE2003 STATUSREPORT .............................................. 17 ANNEX5.REPAYMENTPROFILEOFPADEBTTO THEBANK.......................................................................... 20 ANNEX4.WESTBANKAND GAZAPORTFOLIOTABLE................................................................................... 19 ANNEX6.IFCACTIVITIES AND PORTFOLIOTABLE ....................................................................................... 21 ANNEX7.MIGAPORTFOLIO TABLE .............................................................................................................. 22 ANNEX8.WESTBANKAND GAZAAT-A-GLANCE TABLE............................................................................. 23 3 TRUSTFUNDFORGAZA AND WEST BANK STATUSREPORT INTRODUCTION 1. The Trust Fundfor Gaza and West Bank (TFGWB) was established in 1993 to enablethe Bank to finance projectsinWest Bank and Gaza (WB&G). Since WB&G is not a sovereign state, it cannot apply for membership o f the IMF or the World Bank Group and is, therefore, not eligible for the sources o f financing normally available to member countries. To overcome these legal and practical obstacles, the Bank's Board o f Governors approved a US$50 million grant on November 11, 1993, to be transferred from surplus into a Trust Fundfor Gaza (TFG, subsequently renamed the Trust Fundfor Gaza and West Bank, TFGWB, and increased inpermissible territorial scope as the area under the jurisdiction of the Palestinian Authority was enlarged)'. The TFGWB was devised as a means to hold and administer funds "for the benefit o f the member countries o f the Association". The TFGWB provides financial assistance "to Gaza and for such areas, sectors and activities inthe West Bank which are or will be under the jurisdiction o f the Palestinian Authority pursuant to the relevant Israeli-Palestinian agreements, consistent with the Association's purposes.. ...in accordance with the applicable provisions o f the Articles o f Agreement o f the Association"2. The Resolution establishing the TFGWB obliges IDA, in its capacity o f administrator o f the TFGWB, to periodically report on activities financed from the TFGWB. The most recent Status Report was provided to the Board on December 18, 2003 (Report 27094-62). The current Status Report summarizes the current financial status of the TFGWB, activities undertaken since the 2003 Status Report, and the current status o f the WB&G project portfolio. CURRENTCONTEXT 2. The victory of Hamas in the January 2006 election marked the beginning of a period of exceptional uncertainly in WB&G. At the political level, the incoming government's refusal to meet the international community's conditions, as espoused by 1 Formally, the Borrower under Trust Fund Credit Agreements (TFCA) is "the Palestine Liberation Organization (PLO) for the benefit o f the PA". This structure i s in line with the Oslo Accords between Israel and the PLO. Under this arrangement the PLO makes the proceeds o f TFGWB Credits available to the PA, and the PA undertakes to pay service charges and commitment fees, and to repay the principal. 2 See Resolutions Nos. 93-1 land 93-7 as amended by Resolutions Nos. 95-6 and 96-11 (see also Board Paper No. IDA 2003-193), 93-3 and 96-7 (cf. Board Paper No. IDA 2003-208). 4 the Quartet (commitment to nonviolence, recognition o f Israel, and acceptance o f previous agreements and obligations) created a stalemate, and political dialogue between the PA government, donors and Israel ceased. In addition, the internal political rift between the two dominant Palestinian factions, Hamas and Fatah fueled tensions and resulted in intermittent violence, especially in Gaza. Despite much effort and attempts, including by several Arab states, to mediate, negotiation about forming a coalition government has so far not been successful. Many donors, chiefly the U S and the EC, have imposed anti-terrorist financing legislation on transactions with the PA and ceased all financial support channeled through the PA. The Government of Israel decided to withhold the customs taxes and V A T it collects on behalf o f the PA. The result has been an unprecedented fiscal crisis. Severe restrictions on the movement o f Palestinian people and goods, which the GO1 argues are necessary for security reasons, remain firmly in place, as does on-going military activities by the Israeli Defense Forces, especially in Gaza. 3. Economic activity has been depressed from its already low level. The Bank estimates that real GDP per capita could decline by nine percent this year, bringing the cumulative decline since 1999 to 33 percent. Movement restrictions and border closures are stifling the normal conduct o f commercial activities. For the Bank's forthcoming WB&G Investment Climate Assessment more than 60 percent of Palestinian businesses reported instability and transportation issues are the most important impediments to Palestinian private sector activity. The Bank's ongoing monitoring o f Palestinian movement and access shows that the number o f trucks carrying exports from Gaza have dropped 40 percent from the already low level at the beginning o f 2005, and remains far from the targets set in the November 15, 2005 report Agreement on Movement and Access. 4. About one forth of the labor force is out of a job. The unemployment rate (LIO definition) in Gaza has reached 36.3 percent and 19.1 percent inthe West Bank. During the first nine months o f 2006 the number o fjobs in Gaza declined 6.4 percent compared to the same period a year before. Between 43-2005 and 43-2006 almost 30,000 jobs were lost inGaza. At 157,900, the number ofjobs inGaza has fallen almost exactly to its level 6 years ago, at the eve o f the intlfada. Inthe West Bank, employment levels during the first 9 months o f 2006 have remained roughly unchanged compared to the same period a year ago. However, partly as a result o f fewerjobs inIsrael, employment inthe West Bank contracted 10.6 percent inthe third quarter o f 2006. This is the largest single- quarter decline since the beginning o f the intifada, and perhaps suggests that the spill- over effects from the reduction inpublic spending, through lower aggregate incomes and spending, are now beginning to be felt. The Bank estimates that a continuation o f the status quo could put 41 percent o f the Palestinian population below the national poverty line by the end o f2006. 5. The fiscal crisis has ripple-effects throughout the economy. The PA's fiscal position was already unsustainable before the elections, but has worsened significantly withthe GOI's decisionto suspendthe transfer o fPA customs and VAT revenues, which accounts for two thirds o f the PA's revenues. The IMF estimates that the envelope o f resources available to the PA (including the Presidency) amounted to US$O.Sbn during 5 the 6-month period after the new government came to power compared to US$l.2bn duringthe sameperiodlast year, equivalent to adecline of60percent. As aresult, public sector staff has not received regular salary payments since mid-March, although many, especially lower-paid employees have received irregular payments, including from the President's office and through the EC-administered Temporary InternationalMechanism (TIM, see below). Other public expenditures have been similarly curtailed. About one third o f all employed in WB&G are public sector staff and approximately one million Palestinians depend fully or inpart on the payment o fpublic salaries. 6. The crisis has reversed many institutional gains made in recent years. For example, for fear o f anti-terror litigation, commercial banks have refused to service the PA. As a result, the Single Treasury Account and the associated monitoring and control functions within the Ministry of Finance - key elements in the PA's effort to reform its public financial management system - are no longer operational. Moreover, since the beginning o f September 2006, civil servants have been on strike, protesting that they are not beingpaid. This has crippled the functioning of the public sector's ability to deliver administrative and social services to the population. The PA runs 76 percent o f all schools and 62 percent of all health facilities. Especially in the West Bank, where the strikes are most pervasive, schools have not yet re-opened after the summer break and hospitals andhealthcare centers only provide the most critical services. 7. In response to the crisis, donors have rapidly increased emergency assistance. Since March, Arab donors haveprovidedUS$246 million insupport through the office of PresidentMahmoudAbbas. Inaddition, at their May 9 meeting, the Quartet expressedits "willingness to endorse a Temporary International Mechanism (TIM) that i s limited in scope and duration, operates with full transparency and accountability, and ensures direct delivery o f assistanceto the Palestinianpeople. The Bank's Emergency Services Support Program constitutes the first o f the TIM'S three windows. The EC implements the other two. To date, the EC has disbursedUS$91 million through the TIM, mostly inthe form of cash allowances to the lowest paid civil servants and to social hardship cases. Donors have also increased their aid through UNagencies. As o f September 30, 2006, the UN's Refugee and Works Agency (UNRWA) had received pledges worth US$129 million for their emergency appeal; an increase of 15 percent compared to the pledges for the full year in 2005. While these donor contributions are not sufficient to offset the frozen tax revenues and the decline in other domestic tax revenues, they have helped cushion the impact o fthe economic crisis onPalestinian households. THETRUSTFUND GAZAANDWESTBANK FOR 8. To date, the TFGWB has been replenished five times for a total allocation of US$460 million, most recently in February 2004. An additional US75.7 million has been received in the TFGWB from investment income and from service charges and commitment fees on outstanding Credits. This brings the total TFGWB resources to US$535.7 million. As o f November 2006, US$506.3 million has been committed to 35 6 projects, leaving an uncommitted balance o f US$29.4 million3. Total disbursements from the TFGWB amount to US$444.9 million, or 88 percent of commitments. (See Table 1). As o f end-2006, the PA has accumulated a total debt to IDA of US$314.8 million (see Annex 5). 9. The criteria applicable to the administrationof the TFGWB continue to be met. First, TFGWB activities are seen as corresponding to the interests of the Bank's membership, evidenced by the strong support the Board of Executive Directors has accorded to Bank activities over the past three years. Second, the TFGWB continues to finance activities in areas inwhich the PAhasjurisdiction over civilian matters according to the terms o f the Oslo I1Agreement o f 1995, which is legally still in force. Third, the Bank applies its normal procedures and safeguards to administering the proceeds of the TFGWB, and does so whether aproject is credit or grant financed. Table 1. TrustFundfor Gaza andWest Bank Summarv Fiscal Allocation from Accrued Investment Year BankNet Income and Service Net Commitments Disbursements Income/Surplus Charges (US$ million) (US$ million) (US$ million) (US$ million) FY94 50 FY95 0.1 50.0 10.9 FY96 90 1.o 60.0 19.9 FY97 90 4.6 75.7 38.3 FY98 90 6.9 16.9 50.2 FY99 7.1 53.8 27.1 FYOO 60 10.4 30.2 34.4 FYOl 14.4 36.4 45.5 FY02 13.0 30.0 38.5 FY03 8.1 60.0 38.7 FY04 80 2.6 42.5 80.0 FY05 2.9 40.8 37.2 FY06 2.3 0 17.1 FY07 2.3 10.0 - 1 /.I Total 460 75.7 506.3 444.9 10.Under the resolutions governing the TFGWB, the Board approves the terms of assistance on a case-by-case basis. Before the intifada, all WB&G projects were provided on IDA terms, with one exception4. Since then, as the PA's fiscal situation deteriorated and the Bank reoriented its strategy towards meeting emergency needs, the Boardhas approved thirteen projects on grant terms. 11.The Bank's engagement in WB&G has been characterized by a need to adapt. Several phases o f the Bank's involvement can be discerned (seeAnnex I - Operations in WBhG since the Program's Inception). During the initial period (1994-6) the Bank focused on the rehabilitation o f basic physical infrastructure and the establishment of the 3 Audit fees and an allocation to an ongoing Project Preparation Facility (PPF) account for the difference betweentotal TFGWB resources andthe current resourcesavailable for disbursement. 4 The US$10million grant for the Palestinian NGO Project approvedbythe Board on July 11, 1997. 7 Palestinian Authority. The second phase (1997-2000) was characterized by an increased focus on institution building, private sector development, andregulatory and institutional reform. The most recent period, fiom late 2000 to the present, espoused the twin objectives o f balancing medium-term development activities and providing emergency assistance designed to sustain Palestinian institutions andmitigate poverty. 12. The Bank has played an important role in WB&G as administrator of other donors' funds. Interms o f financing, the Bank is a small player in WB&G, accounting for some five percent o f the US$8.3 billion the donors have disbursed since 1994. However, the Bank has administered US$860 million in donor funds in the amount o f more than US$860 million. Adding parallel financing, the Bank has attracted just over US$1.3 billion. Thus, the Bank has guided approximately 16 percent o f all donor disbursements since 1994, and has leveraged US$2.6 for every dollar committed from the TFGWB. Table 2 provides examples of recent and ongoing projects that have generated significant co- or parallelfinancing. Table 2. LeveragingDonor Funds TFGWB Donor Funding Project Cost Leveraging Funding ($ m) (US$ m) (US$ m) Ratioli Emergency Services Support Project I&II 60.0 100.0 160 1.7 PalestinianNGOProject I&lI 18.0 16.2 34.2 0.9 Electricity Sector Management and Investment Project 15.0 76.0 91.0 5.1 Emergency Municipal Services Rehabilitation Project 20.0 95.0 115.0 4.8 I/ eachUS$committedundertheTFGWB. For ACTIVITIESIMPLEMENTED SINCETHE2003 STATUSREPORT 13. In responseto the particular circumstances in WB&G in recent years, the Bank has relied on a two-pronged strategy. This was most recently espoused in the 2003 TFGWB Status Report. The first strategy pillar is to leverage efforts to manage the WB&G emergency, by strengthening capacities for and financing the delivery of basic services to the poor. The second strategy pillar i s to sustain and strengthen sound economic strategies, policies and institutions across five key Palestinian "institutional domains" (PA ministries, municipalities, NGOs, universities, and private sector representative bodies). In parallel, the Bank has focused on monitoring and analyzing emerging socio-economic developments and donor interventions, and has also made efforts to convene Palestinian and Israeli economic interest groups. 14. On balance, implementation of activities since the 2003 TFGWB Status Report has been satisfactory. In retrospect, two-pronged approach was a prudent response to the uncertainties characterizing the situation in WB&G and allowed the Bank sufficient flexibility to respond effectively to emerging challenges and opportunities. The envisaged program o f AAA and projects was delivered largely as planned (see Box I). Some adjustments were made along the way to accommodate shifting priorities of the 8 PA, other donors' interventions, and our own assessment o f where the Bank could best influence sector-wide policy choices and catalyze donor funds. 15. Since the 2003 Status Report, fourteen5projects have been completed. Of these, ten successfully achieved their development objectives while four were rated unsuccessful at completion. All four unsuccesshl projects-the Palestinian Expatriate Professional Project, the Gaza Industrial Estate Project, the Legal Development Project and the Southern Area Water and Sanitation Project -have incommontheir pre-intifada genesis, a time when the Palestinian operating environment and the Bank's strategic focus were concentrated on the putative emergence o f a Palestinian state-a perspective overtaken by the unforeseen demands o f the intifada-related emergency. (See Annex 2 - Summary of CompletedProjects since the 2003 Status Report). 16. The Bank's has delivered a strong AAA program. The Bank's analytical and policy work has, from the outset, laid the basis for our role inWB&G. The Bank's AAA work has historically included context-specific `just-in-time' economic reports, as well as regular sector policy reports. The first set o f reports enhanced the Bank's reputation as a technical third-party analyzing timely "big picture issues" inWB&G. The Bank's AAA are used by all parties - the Palestinian counterparts, GO1and the donors - to interpret the state o f the economy and to help define the key institutional, policy and financing challenges facing the Palestinians. An example o f this type of AAA i s our work on the movement and access agenda, where our focus on commercially-friendly trade corridors complements security related considerations pursued by the work o f U S Security Coordinator Gen. Dayton and the EU's Border Assistance Mission. Our sector policy reports have helped identify priority areas for Bank project intervention as i s the case, for example, for our report on intergovernmental fiscal relations. (See Annex 3 -Summary of CompletedAAA since the 2003 Status Report). 5Per institutional conventions, the ESSP-Supplemental is counted as an individual project. 9 Box 1. Status ofImplementation of the 2003 Strategy Activity IStatus FirstPillar: Strengtheningcapacitiesfor and financing the delivery Fbasicservices to thepoor Projects: >>>>>>>>> Second Emergency Services Support Project Delivered Emergency Water Project Delivered Social Safety Net ReformProject Delivered Tertiary Education Project Delivered Gaza Water and Sanitation Services Project I1 Delivered Wastewater Reuse Project Replaced 1/ HealthSector Development Project I1 Dropped NGOCapacity BuildingProject I11 Prepared Avian Influenza Project Delivered (not originally foreseen) AAA: 9 PASocio-Economic StabilizationPlan Delivered SecondPillar: Projects: >>> Municipal Finance and Land TitlingProject Delivered 3/ Structural Adjustment Operation Delivered Pension ReformProject Delayed AAA: >> Trade FacilitationStudy Delivered Country Economic Memorandum Delivered Monitoring and analynng emergingsocio-economic developments and donor interventions AAA: > >>>>>>> Socio-economic monitoringprogram Delivered Infrastructure Assessment Delivered Country FinancialAccountability Assessment Delivered Country Procurement Assessment Review Delivered HumanDevelopment Strategy Delivered Water and Wastewater Study Delivered NGOStudy Delivered Rapid Environmental Survey Dropped AAA: > Inthe context ofdisengagement, the Bankhas beenintensively Delivered engaged as a technical thrd partyininteractions between P A and GO1officials. Inaddition the Bank participated in various events involving bothparties. 10 CURRENTPORTFOLIOSTATUS 17. The Bank currently has 10 projects under implementation. The total outstanding commitments of the portfolio amount to US$107.8 million, including the Avian and HumanInfluenza Control and PreventionProject that the Board approved on September 7, 2006. The Bank portfolio covers a variety o f sectors. The water sector i s the single largest sector o f engagement, at 37 percent o f total commitments. (Table 3, Status of Current Portfolio). To enhance effectiveness o f the portfolio and reduce risks, the portfolio has been consolidated considerably in recent years. At the end o f FY02, prior to the Board presentation o f the last TFGWB Status Report, the portfolio consisted o f 18 projects. Since then, the number o f projects under implementation has been reduced by more than one-third to 10 today. Net commitments have been more than halved from US$237 million at the end o f FY02 to US$SO8 million today. Partly reflecting the shift towards emergency-type operations, the WB&G disbursement ratio has in recent years significantly exceeded Bank- and Region-wide averages. During FY04-06, the WB&G disbursement rate averaged 43.1 percent6. (see Table 4, Portfolio Indicators). Social SafetyNet Project 10.0 1.o U MU NorthGazaEmergencySewage TreatmentProject 7.8 4.3 S S LandAdministration Project 3.0 0.4 M S MU Tertiary EducationProject 10.0 1.o M S S GazaI1EmergencyWater Project 20.0 5.4 MU MS 18. Project implementation is increasingly strained by the situation on the ground. Ofthe 10projects currently under implementation, only two are currently rated "Satisfactory" in terms o f both their achievement o f development objectives and implementation progress. The two projects are the Northern Gaza Emergency Sewage Treatment Project and the West Bank Emergency Water Project. Both projects benefit from being relatively simple infrastructure projects, largely implemented by local contractors. Three projects are currently rated "Unsatisfactory" (or "Moderately Unsatisfactory"). Incase of the Social Safety Net Reform Project, the PA's fiscal crisis 6Disbursements ratios for MNA were 15.5 percent in FY04, 15.2 percent in FY05, and 18.1 percent in FY06.The Bank-wideaverages were 21.2, 23.3 and 24.1 percent, respectively. 1s have eliminated the considerably counterpart financing originally expected under the Project. Moreover, the ongoing strike among civil servants has seriously hampered project implementationby the Ministry o f Social Affairs. The main obstacle facing the Land Administration Project and the Gaza Emergency Water Project is that the two projects depend to a significant degree on technical assistance from international contractors, which are increasingly difficult to attract to WB&G. Implementationo f the remaining five on-going projects i s considered Moderately Satisfactory, but with considerable down-side risk, inparticular for the Tertiary Education Project, which relies heavily onthe Ministryo f Educationfor implementation o fparts o fthe project. FY02 FY03 FY04 FY05 N o v FY06 2006 DisbursementRatio 18.9 46.7 53.4 51.1 24.5 9.8 NumberofProjects 18 15 13 13 8 10 Net Commitment (US$) 237.7 189.1 189.0 153.8 82.8 107.8 % at Risk 28 27 7 6.5 51.9 51.9 Realism (%) 60 75 100 100 100 80 Proactivity (%) 67 67 100 100 0 0 20. Risks to project implementation remain high. Intermittent violence, movement restriction, anti-terror legislation, and - o f late - fraying counterpart institutions, impede implementation o f donor financed projects in WB&G and increase project-specific risk. Project implementation has been affected by price increases, shortages o f goods and materials, and increased commercial risk (discouraging private investment and cross-border partnerships). It has also become increasingly difficult to attract international consultants to WB&G, limiting our ability to implement more complex project activities. Bank staff need to take carefid security precautions and are subject to various forms o f movement restriction, all o f which complicate the Bank's work. 21. The CountryTeamhastaken a number steps to copewith projectrisks. P Decentralization.Project implementation has been progressively decentralized. Inparticular, the Bank's continuedpresence inGaza, through our office there, is critical for implementation o f our Gaza-based projects, as access is often restricted. 12 9 Fiduciary Oversight. The June 2006 Country Portfolio Performance Review (CPPR) confirmed that financial management and procurement capacities at the Project Implementation Units remain weak. For example, a recent review o f Financial Monitoring Reports (FMRs) found several not to have been submitted on time and those submitted o f generally less than fully satisfactory in quality7. The Bank has strengthened our fiduciary oversight through senior field-based procurement and financial management staff, and through implementation o f a tailor-made Fiduciary Action Plan. However, fiduciary capacity building efforts are hampered by the difficulties of specialist Bank staff to travel fkom Jerusalem to Gaza and thus train PlU staff sur place. By way of mitigating, in recent months Bank Financial Management staff has carried out series o f financial management workshops where Gaza PIUsparticipatedvia video-link. > Project Design. New projects are scrutinized carehlly for simplicity o f design and potential flexibility. Particular attention is paid to projects being hlly ready for implementation by the time they are presented to the Board, with no substantive conditions o f effectiveness left outstanding'. Periodic Country Portfolio Performance Reviews are being carried out, to formalize a process o f continuous project adjustment; the next CPPR i s scheduled for February 2007, with a view to assess portfolio-wide impediments to project implementation and recommend mitigating measures, including possibly project restructurings. > Finally, the Bank continues its operational dialogue with the GO1- inparticular through the Task Force for Project Implementation (TFPI), a multi-donor committee in which we interface frequently with the Israeli Defense Forces on project implementation issues. 7 The 2004 Country Financial Accountability Assessment, whde recognizing many significant improvements during2002-04, rated financial management risks "significant". Further progress was made under the Bank-managed Public Financial Management Reform Trust Fund, but since March 2006, the Palestinian budget system has become increasingly fragmented, and many of the gains made inearlier year have beenreversed. 8Of the 35 projects approved from the TFGWB to date, only one has had effectiveness delay (the Emergency Water Project was delayed due to a change in government, the project has since been implemented satisfactory). 13 Annex 1.OperationsinWest Bank and Gaza since the Program's Inception Strategic Projects Commitment Status Objective (US$ million) 1994-1996: Rehabilitation of 30.0 (Credit) Completed infrastructure -- Emergency Rehabilitation Project I - Emergency Rehabilitation Project II 20.0 (Credit) Completed EducationandHealth Rehabilitation Project 20.0 (Credit) Completed --------- Community Development Project I 10.0 (Credit) Completed Community Development Project I1 8.0 (Credit) Completed Municipal Development Project I 40.0 (Credit) Completed Municipal Development Project I1 7.5 (Credit) Completed PalestinianNGOProject I 10.0(Grant) Completed Bethlehem2000 Project 25.0 (Credit) Completed LegalDevelopment Project 2.8 (Credit) Completed HealthSystemDevelopmentProject 7.9 (Credit) Completed PalestinianProfessional Expatriate Project I 3.0 (Credit) Completed Regulatory and Completed institutional reform - Solid Waste and Environmental Management Project 9.5 (Credit) Completed -- Electricity Sector Investment Management Project 15.0 (Credit) Ongoing Southern Area Water and Sanitation Improvement Project 21.O (Credit) Completed Private sector 2.2 (Credit) Completed development ---- Micro-Enterprise Project Gaza IndustrialEstate Project 10.0(Credit) Completed PalestinianHousing Project 17.4 (Credit) Completed PalestinianInvestment Guarantee Fund(MIGA) 10.0(Credit) Ongoing 2001-present Institution building - EducationAction Program 7.0 (Credit) Completed - PalestinianNGOProject I1 --- Tertiary 8.0 (Grant) Completed Integrated Community Support Project 10.0(Credit) Ongoing Land Administration Project 3.0 (Grant) Ongoing Education Project 10.0 (Grant) Ongoing - Social Safety Net Project 10.0 (Grant) Ongoing Emergency 12.0 (Grant) Completed response: j o b -- Emergency Response Program Emergency Services Support Project I 20.0 (Credit) Completed creation and - Emergency Services support Project 11 25.0 (Grant) Completed sewice delivery -- Emergency Services Support Project Supplemental 15.0 (Grant) Completed Avian Influenza Project 10.0 (Grant) Ongoing Emergency - Public FinancialManagement ReformStructural response and Adjustment Operation institution-building - Emergency Municipal Services Rehabilitation Project --- NorthGazaWater Project Emergency 12.5 (Grant) Ongoing Gaza I1Emergency Water Project 20.0 (Grant) Ongoing Emergency Sewage Treatment Project 14 Annex 2. Summary of CompIeted Projects since the 2003 Status Report - Bethlehem 2000 Project (IEG outcome rating: Moderately Satisfactory). The Project took advantage o f t h e millennium celebrations to hrghlight Bethlehem's cultural, historical and religious assets. It sought to promote the Palestinian tourism industry and harness its development impact to address infrastructure backlogs and local government issues. The Project was successful in creating the organizational framework for the millennium and Easter 2000 celebrations that were broadcast worldwide. However, soon after the outbreak of the intifada some o f the other objectives were restructured to target areas in dire need. The institutional impact was nonetheless substantial and considerable infrastructure improvements were made. - Legal Development Project (IEG outcome rating: Highly Unsatisfactory). The Project sought to address the disparity between West Bank and Gaza by puttinginplace a legal framework to support a modem market economy and encourage growth inthe private sector as well as increase the efficiency and transparency o f the judicial process. The project was developed inthe context o f the PA's Rule of Law Strategic Development Plan o f October 1996.Due mainly to a lack o f commitment o f the P A and internal competition between the Ministry o f Justice and the Supreme Judicial Council, several components were cancelled and the achievement of the remaining ones was modest. - SecondMunicipal Irjkastructure Development Project (IEG outcome rating: Satisfactory). Buildingon the success of a string o f earlier operations, the Project aimed to improve infrastructure services and strengthen municipal and local government capacities. The advent o f the intifada required a comprehensive restructuring even before implementation began. The two original objectives were scaled down and employment generation and damage repair components were added. The Project was successful in reaching the revised objectives although some shortfalls in capacity building at the municipal level occurred. Furthermore, due to closures and communication problems between West Bank and Gaza, success was more limited inthe Gaza Strip. - Palestinian Expatriate Professional Program (IEG outcome rating: Unsatisfactory). The Project's objective was to strengthen the PA's institutional capacities through the recruitment of Palestinian expatriate management and technical experts. An international consulting firm was hiredto advertise the jobs internationally but failed to attract the expected response. Moreover, after the outbreak o f the intifada, attracting slulled professionals proved increasingly difficult. Overall, due to a lack o f commitment and supervision, the performance targets were missed and institutional learning was negligible. - Public Sector Financial Management Reform Structural Adjustment Operation (IEG outcome rating: Satisfactory). As the intifada evolved the PA's fiscal position became increasingly untenable. In response to this crisis, the Bank set up a mechanism-the ReformFund-in coordination with donors ready to provide budget support to the PA. The Operation aimed to provide emergency budgetary assistance, leverage and harmonize donor funds by providing fiduciary assurances, and strengthen the PA's ongoing financial management reform agenda. It achieved all but one performance indicator- the shortfall inthe pensionreformcomponent is being addressed through the ReformFund. - Emergency Services Support Projects IHI, and Supplemental Grant (IEG outcome rating: Satisfactory). This string o f projects aimed to mitigate the deterioration o f basic social and municipal services brought about by the conflict's deleterious effect on economic activity and PA revenues. By financing non-wage, recurrent expenditures o f the social ministries the projects enabled the PA to provide services and prevent a potential social crisis. Some intuitional capacity building was also achieved. Inaddition, the projects succeeded inleveraging significant amounts o f donor co-financing. - Housing Project (IEG outcome rating: Satisfactory). Designed to address the shortage o f affordable housing inWB&G, the Project took a three-pronged approach: policy development and the creation o f institutional capacity in the sector, facilitating housing finance by encouraging mortgage lending 15 through commercial banks, and physically developing housing. The latter component was later dropped as self-regulating forces in the housing market rendered the housing development component unnecessary. The PA's implementation performance has been only moderately satisfactory. However, the performance o f the Palestine Mortgage and Housing Corporation, which the Project helped establish, has been considered exemplary. Braving a challenging investment climate, the Project has also strengthened Ministryo fHousing capacity and helped make the housingmarket more efficient. - Health System Development Project (IEG outcome rating: Satisfactory). The Project was devised to enhance the management capacity o f the Ministry o f Health and improve access to high-quality and affordable primary health care services. Frequent movement restrictions made access to health care even more o f a priority. The Project succeeded in upgrading the primary health care network, establishing a health management information system, and improving the quality and efficiency o f care. The Project has also been credited with improving the condition o f certain vulnerable groups, for example, diabetes patients. - Gaza Industrial Estate Project (IEG outcome rating: Unsatisfactory). The Project aimed to create employment through supporting private sector investments and PalestiniadIsraeli business links and establishing appropriate physical infrastructure. Compounded by its proximity to Israeli military checkpoints, the Project was quickly affected by the violence and political instability o f the intifada, including access restrictions and direct Israeli military activity. Subsequently, the Project lagged expectations withrespect to job creation and investment promotion. The only progress was achieved in' the realmo fphysical infrastructure where an agreement with the IDFhadbeenreached. - Emergency Municipal Service Rehabilitation Project (ICR outcome rating: Satisfactory). The project's objectives were to help mitigate further deterioration inthe quality and coverage o f essential municipal services by providing budgetary support for non-wage municipal operating costs, create temporary labor-intensive employment opportunities and introduce a mechanism to link central and local government budgetary planning processes to strengthen Palestinian emergency response capacity, enhance mobilization o f donor assistance, and improve the efficiency and equity o f resource transfers to local governments. - Southern Area Water and Sanitation Project (ICR outcome rating: Unsatisfactory). The project was designed to improve sufficiency and efficiency o f water and wastewater services in the southern area o f the West Bank through preparation and implementation o f an appropriate institutional framework for water and wastewater service provision including the implementation of a 4-year performance- based management contract and strengthen institutional capacity o f P W A to become sector regulator. The institutional capacity components, however, were never achieved and funds were re-allocated to emergency repair following the start o fthe second intifada. - Education Action Project (ICR outcome rating: Moderately Satisfactory). The project aimed to strengthen the capacity of the Ministry o f Education (MOE) to manage the education system more effectively through improved policy-makmg, planning and budgeting at central and district levels. The project did not contribute sufficiently to the development o f managerial capacities and the planning processes inthe Ministry o f Education remain largely donor dnven. 16 Annex 3. Summary of Completed AAA since the 2003 Status Report - Vulnerable Children Assessment (April 2004). Within the framework o f the Human Development Strategy (see below), this report analyzes the risks to cbldren and youth as well as the policies and programs targeting them. The assessment also makes recommendations for a comprehensive child protection and development framework to mitigate the effects of the crisis on Palestinian children and ensure that current social protectionfacilities include the most vulnerable. - Wastewater Treatment and Reuse Policy Note (June 2004). This note presents an analysis o f the situation with regard to water resources (supply/demand);wastewater availability, treatment and reuse; regulatory and institutional frameworks; and social, environmental, economic and financial aspects. The note includes a summary o f lessons learned and best practices from other countries along with basic guidelines regarding the treatment and reuse o f water. It also contains a set o f short- and medium-termrecommendations. - Country Financial Accountability Assessment (June 2004). The CFAA reports that major improvements in budgeting (both development and execution) and in fiscal transparency were introduced. There are, however, residual weaknesses infinancial accountability wluch relate to the lack of adequate public aggregate financial statements, inadequate auditing and the undeveloped oversight role o fthe Palestinian Legislative Council. The P A i s addressing many o fthese shortcomings under the framework o f the Bank-administered ReformFund - Country Procurement Assessment Report (December 2004). The CPAR considers the existing procurement system in WB&G as reasonably fair. Procurement laws and regulations are fragmented and sometimes incomprehensive but are generally in line with accepted procurement practices. However, the implementation o f these laws and regulations is inconsistent. The Bank supports improvements inthe PA's procurement system through an InstitutionalDevelopment Fundgrant. - Inj?astructure Assessment (December 2004). Assessing the performance and condition o f electricity, water and wastewater, transport and telecommunications services inWB&G, t h s report describes the efforts o f the PA to manage and modernize the infiastructure system over the past ten years. The study identifies the major issues facing these core infrastructure sectors. Taking into account the current social, economic and political situation, it sets out short- and medium-term options for development and investments needs. The Assessment is one o f the central pillars of the PA's Medium-Term Development Plan 2006-8. - Frameworkfor a Medium-Term Human Development Strategy (June 2005). This report is intended to support the ongoing dialogue among the PA, civil society and the donor community regarding the implementation o f the Medium-Term Development Plan-to address poverty in a sustainable way, reduce unemployment, and build social capital and functioning state institutions. T o this effect, the Strategy undertakes a situation analysis and identifies priority issues and strategies for the three major social sectors: social protection, education, and health. - The Role and Performance of Palestinian NGOs in Health, Education and Agriculture (December 2005). Tlus report expands the available knowledge base on the work o f Palestinian NGOs as service providers inthree sectors: health, education and agriculture. It assessesthe effectiveness and quality o f their service delivery function by exploring issues o f accountability and management practices, targeting and participation, and quality standards and monitoring. The report also reviews the constraints faced by NGOs inaccessing donor funding and the level o f their cooperation with the PA and other localpartners. - Papers on Movement and Access-Contributions to a Negotiated Solution (December 2005). Inclose collaboration withthe Quartet Special Envoy, the United States and the EC, the Bank prepared twelve 17 policy notes on a variety of critical issues, including alternatives to `back-to-back' cargo movement, improved border logistics (infrastructure design, traffic flow, cargo inspection procedures and technology), options for developing a territorial link between Gaza and the West Bank, methods for initiating a convoy system o f trucks and buses for the movement o f goods and people between the two Palestinian territories as an interim measure, and on the creation o f a Palestinian Border Service Agency, among others. These notes have provided the technical underpinning for the negotiations betweenthe two parties. - Four Years - Intifada, Closures and Palestinian Economic Crisis-an Assessment (October 2004). T h ~ report follows two earlier assessments (Fifteen Months, Twenty-Seven Months) and analyzes the s effects o f the political and security situation in2003-4 on the lives and livelihoods of Palestinians, and how Palestinians, Israelis and the donor community have responded. The Assessment aims to help donors and the P A cope with the economic crisis in WB&G and to inform the discussion on Palestinian economic issues among the donors, the PA and GOI. - Poverty in West Bank and Gaza after Three Years of Economic Crisis (November 2004). This report focuses on the situation of the poorest o f the poor and finds that 16 percent of the Palestinian populationcannot afford to consume the established minimumcaloric intake. Increasing the volume o f emergency assistance could be an effective solution to fight poverty inthe short-term, if it can reduce under-coverage and systematic biases. Structural policies aimed at lowering dependency ratios and improving labor productivity are essential to reduce subsistence poverty inthe longer-term. The report recommends the implementation o f new programs designed to reach the poorest-people from Gaza and rural areas, as well as the inactive, unemployed and less educated. - Israeli Disengagement and Palestinian Economic Prospects. (June and December 2004). Uponrequest by the PA, GO1and the international community the Bank analyzed the potential economic impact o f Israel's Disengagement Plan in two reports: Disengagement, the Palestinian Economy and the Settlements (June) and Stagnation or Revival? Israeli Disengagement and Palestinian Economic Prospects (December). In cooperation with USAID, the EC and DFID, the Bank also produced four Techmcal Papers: I-Borders and Trade Logistics, 11-Industrial Estates, 111-Export Possibilities Under a Reformed Border Regime, and IV-Settlements. Stagnation or Revival? defmed the donors' response to the economic aspects o f disengagement. - Economic Monitoring Report to the Ad Hoc Liaison Committee Number 1 (December 2005). This report entitled ThePalestinian Economy and the Prospectsfor its Recovery was prepared as an inputto the AHLC meeting o f December 14, 2005. It indicated that the preconditions for sustained, rapid growth are not yet inplace and presentedthe areas where policy measures by GO1and the PA need to be taken. The findings o f the report were conf3rmed by the AHLC which deferred a decision about a pledging conference until, among others, the submission o f the Bank's second Economic Monitoring Report. - County Economic Memorandum (September 2006) This report assesses the economic costs of the continuation scenario as it has unfolded following the outbreak o f the Intifada and provides input to what is needed to jump start the Palestinian economy. The Report complements the analysis o f the World Bank's December 2004 study: Stagnation or Revival: Israeli Disengagement and Palestinian Economic Prospects, which dealt with similar issues by expanding the discussion on key conditioning factors that affects the environment inwhich Palestinian economy is evolving. - Education Sector Analysis - Impressive Achievements under Harsh Conditions and the Way Forward to Consolidate a Quality Education System (September 2006). The report identified key priority areas o f intervention to keep the hnctionality o f the education system and improve performance in accordance with economic and social needs o f the Palestinian population. 18 Annex 4. West Bank and Gaza PortfolioTable West Bankand Gaza Portfolio November 1,2006 Trust Fundfor Gaza and the West Bank Co-financing Committed Disbursed Undisbursed Disbursed Committed Disbursed Undisbursed Disbursed CURRENT PROJECTS US6 Miiiion Percent US$Million Percent * 00 Electricity Sector Management Project 15.0 14.9 0.1 99%1 OlSolid Waste and Environmental Management Project 9.5 3.9 5.6 42% 02 Integrated CommunityDevelopment Project 10.0 8.3 1.7 83% 04 Emergency Water Project 12.5 7.0 5.5 56% 04 Social Safety Net Project 10.0 1.O 9.0 10% 05 North Gaza Emergency SewageTreaIment Project 7.8 4.3 3.5 55% 14.0 0.0 14.0 00 05 Land Administration Project 3.O 0.4 2.6 14% 1.5 0.4 1.1 270 05 Tertiary Education Project 10.0 1.o 9.0 10% 7.6 0.7 6.9 9' 05 Gaza 11EmergencyWater Project 20.0 5.4 14.6 27% 07 Avian Influenza Project 10.0 0.0 10.0 0% Total 107.8 46.3 61.5 43% 23.1 1.1 22.0 57 COMPLETED PROJECTS 03 Emergency Services Support ProjectI1 40.0 40.0 0.0 100% 71.6 71.6 0.0 1009 97 Palestinian Expatriate ProfessionalProgram 2.3 2.3 0.0 100% 0.3 0.3 0.0 100' 02 Emergency Services Support Project 20.0 20.0 0.0 100% 29.2 29.2 0.0 100' 04 Public Financial Management ReformSA0 20.0 20.0 0.0 100% 97 Legal Development Program 2.5 2.8 0.0 112% 96 Municipal Infrastructure and Development Project 40.0 40.0 0.0 100% 5.4 5.4 0.0 1009 97 Microenterprise Project 2.2 2.2 0.0 100% 95 Emergency Rehabilitation Project 30.0 30.0 0.0 100% 63.9 63.9 0.0 1000 97 MIGA Fund 10.0 10.0 0.0 100% 96 Emergency Rehabilitation Project I1 20.0 20.0 0.0 100% 3.5 3.5 0.0 1000 97 Community Development Project 10.0 10.0 0.0 100% 2.8 2.8 01Emergency ResponseProgram 12.0 12.0 0.0 100% 95 Educationand Health Rehabilitation Project 20.0 20.0 0.0 100% 29.1 29.1 0.0 1000 99 Community Development Project I1 8.0 8.0 0.0 100% 97 Gaza Water and Sanitation Project 31.0 31.0 0.0 100% 98 Palestinian NGOProject 10.0 10.0 0.0 100% 4.6 4.6 0.0 1001 99 Bethlehem 2000 24.9 25.0 0.0 101% 3.6 3.6 0.0 1000 97 Palestinian Housing Project 17.4 17.4 0.0 100% 98 Gaza IndustrialEstate 7.2 6.9 0.0 96% 99 Southern Area Water and Sanitation Project 21.0 21.0 0.0 100% 00 Health SystemDevelopment Project 7.9 7.9 0.0 100% 01 EducationAction Project 7.0 6.9 0.0 99% 03 Emergency Municipal Services Rehabilitation Project 20.0 20.0 0.0 100% 01 PalestinianNGOI1Project 8.0 8.0 0.0 100% 11.6 10.2 1.4 88' 00 MunicipalInftastructure and Development Project I1 7.3 7.3 0.0 100% Total Completed 398.5 398.7 0.0 100% 225.7 224.3 1.4 99? TOTAL (Current & Completed) 506.3 444.9 61.4 88% 248.8 214.1 0.0 869 DONORNKDEDTRUST FUNDS The HolstFund** 273.4 273.4 0.0 loo< Technical Assistance Trust Fund** 23.6 23.6 0.0 loo< PEACEFacility** 25.0 24.3 0.7 97' Public Financial Management ReformTrustFund** 273.4 273.4 0.0 100'. Emergency Services Support Program TOT^ DONOR FUIVDED TRUSTFUNDS 1 19.3 5.9 13.4 30' 614.7 600.6 0.7 989 GRAND TOTAL 506.3 444.9 61.4 88?6'/ul 863.5 814.6 0.7 94'! * Forsome wfinancing, investmentincomeis addedto theprincipal anddisbuned causing disbursementsto go aboye100% **Closed 2/ Year approvedby WorldBankBoardo fExecutiveDirectors 19 Annex 5. RepaymentProfileof PADebtto the Bank 20 Annex 6. IFC Activities and Portfolio Table Background. Prior to the Intifada, IFC was very active in the territories. I F C had committed a total o f US$54millionin 15 companies, o fw h c h US$3Imillionhad been disbursed, including equity investments amounting to US$14 million. In the period since September 2000, IFC has focused on managing the portfolio and has significantly reduced its exposure. IFC's outstanding portfolio stood at $15 million in 11 firms as ofend September 2006. Providedthe security situation improves, IFCplansto re-engage with its traditional investment products as well as technical assistance through PEP-MENA. Teams from FC's MENAhubinCairo have completedmappingmissions to assessthe opportunities. Investments under consideration provided the security situation improves. IFC is considering investments in the financial sector, industry, telecom and services. This would include microfinance, a small business financing facility with local banks, a hotel, fmancing a cellular phone company, a private hospital inGaza, an offshore gas investment and industrial estates. Through its Private Enterprise Partnership for Middle East and North Africa, IFC plans to provide significant support through technical assistance. IFC will target SME growth sectors, with special attention to agribusiness, stone and marble, construction and pharmaceuticals. TA interventions will be designed to develop SMEs and make them more bankable and to develop a corporate governance national code for the private sector. Some o f the projects are already under implementation; however at a slower pace than expected due to the current situation. TA interventions will focus on the following: 9 SME management Training (Business Edge Training Program) Training materials focus on financial, operational and marketing management and effective human resources management and sound leadership. 9 MicrofinanceTA. Anassessmentisbeingconductedto assessthe demandandfinancial needs of potential microfinance clients. 9 SME Bank Advisory. Advisory services to develop banking products and systems to cater to SME clients. 9 SME sector analysis. Under the Industry Development Program(IDP), IFC is providingTA to enhance a group o f SMEs inthe olive oil cluster interms ofproduct quality and accessto markets. Pme 1 21 Annex 7. MIGA Portfolio Table MIGA GuaranteeInvestmentFund - Subscriptions Guarantees Issued Amount Source ~ US$ Prqject Date Creditfrom Trust Fundfor Gaza and Solomons' Pools(US5 million) 30-Jw-99 the West Bank 10million Contract hasbeencancelled EuropeanInvestmentBank 6.3 million Japan 5.1 million 22 Annex 8. West Bank and Gaza At-a-GlanceTable I West East Lower Key DevelopmentIndicators Bank aM.NO^ middle Gaza Africa income Age distribution, 2005 (2005) Male Female Population,mid-year (millions) 3.6 305 2,475 70-74 Surface area (thousandsq. km) 8,984 39,946 Population growth (%) 60-64 3.3 1.8 1.o Urban population(% of total population) 72 57 50 50-54 40-44 GNI (Atlas method, US$ billions) 4.5 685 4,746 3034 GNI per capita (Atlas method, US$) 1,230 2,241 1,918 20-24 GNI per capita (PPP, international$) 6,076 6,313 10-14 0-4 GDPgrowth (%) 6.3 4.6 6.9 i o 20 GDPper capita growth (%) 2.8 2.8 5.9 Dercent (most recentestimate, 2Oo(rzOOS) Poverty headcountratioat $1 a day (PPP,%) 2 Poverty headcountratioat $2a day (PPP.%) 34 20 Under4rnortalltyrate (per 1,000) Life expectancyat bilth (years) 73 69 70 Infant mortality(per 1,000live births) 44 33 Child malnutrition(% of children under5) 13 12 ~ Adult literacy,male (% of ages 15 and older) 97 82 93 Adult literacy,female (% of ages 15and older) I 88 62 85 Grass primaryenrollment. male (%ofage group) 93 106 115 Gross primaryenrollment,female (% of age group) 93 IO0 113 Access to an improvedwater source (% of population) 92 89 82 Access to improvedsanitationfacilities (%of population) 73 76 57 1990 1995 2WO 20M 3WestBankandGaza( ) 0MiddleEast8 NorthAfrica Net Aid Flows 1980 I990 2000 2005 (US$ mi//ions) Net ODA and offklal aid 179 637 1,136 Growth of GDP and GDP per capita(%) Top3 donors (in 2004): 20 10 Aid (% of GNI) 13.3 28.4 0 Aid per capita (US$) 87 215 313 -10 Long-Term EconomicTrends -20 95 W Consumerprices(annual% change) GDPimplicit deflator(annual% change) 2.9 4.9 +GDP -GDPper capita Exchangerate (annualaverage, lmlper US$) 4.1 4.5 Terms of trade index(2000 = 100) 100 105 1980-90 1990-2000 2000-05 (average annualgrowth %) Population,mid-year(millions) 2.0 3.0 3.6 4.1 4.0 GDP(US$millions) .. 4,113 4,014 7.3 4.9 (% of GDP) Agriculture Industry Manufacturing Services Householdfinal consumptionexpenditure 95.5 95.8 5.3 -1.5 Generalgov't final consumptionexpenditure 27.0 32.6 12.7 1.3 Grasscapitalformation 32.7 25.7 9.2 -3.0 Exportsof goods and services 16.0 14.0 8.7 -3.1 Importsof goods and services 71.2 68.2 7.5 -2.3 Grass savings 7.8 12.8 Note: Figures in italicsare for years other than thosespecified. 2005 data are preliminaryestimates. ..indicatesdata are notavailable. a. Aid data arefor 2004. Development Economics,Development Data Group (DECDG). 23 West Bank and Gaza Balanceof Payments and Trade 2000 2005 [Governance indicators, 2000 and 2004 (US$ mi//ions) Total merchandiseexports(fob) 674 433 Total merchandiseimports(cif) 2,490 1,866 Voice andaccountabiiity Nettradein goodsand services -2,270 -2,173 Politicalstability Workers' remittancesand I i compensationof employees(receipts) 1.124 692 Regulatoryquality ........ I Currentaccount balance -1,025 -520 Ruleof law as a % of GDP -24.9 -13.0 Controlof corruption Reserves, includinggold 0 25 50 75 Central Government Finance Country's percentilerank(0-100) nzooo hmhmvalu~simp+ beherrntim~s (% of GDP) Revenue Source: Kaufmnn-Kraay-MaStNzi, World Bank Tax revenue Expense Technology and Infrastructure 2000 2004 Cash surplus/deficit Pavedroads (% of total) Highestmarginaltax rate (%) Fixedline and mobile phone Individual subscribers (per 1,000people) 151 380 Corporate Hightechnologyexports (% of manufacturedexports) External Debt and Resource Flows Environment (US$ mi//ions) Total debt outstandingand disbursed 1,704 Agricultural land(% of landarea) Total debt service Forestarea (% of landarea, 2000and 2005) HlPC and MDRldebt relief (expected;flow) - - Nationallyprotectedareas (% of landarea) Total debt (% of GDP) Freshwaterresourcesper capita (cu. meters) 13 Total debt service(% of exports) Freshwaterwithdrawal (% of internal resources) Foreigndirectinvestment(net inflows) CO2 emissions per capita (mt) Portfolioequity(net inflows) GDP per unitof energy use (2000 PPP$ per kgof oil equivalent) Composltionoftotal external debt, 2005 (data are not available) Energyuse per capita (kgof oil equivalent) (US$ mi//ions) IBRD Totaldebt outstandingand disbursed Disbursements Principalrepayments interestpayments IUS$milions IDA (Trust Fundfor GamandWest Bank) Total debt outstandingand disbursed 272 317 Disbursements 37 31 Private Sector Development 2000 2005 Total debt service 0 1 Time requiredto start a business (days) - 106 IFC(fiscalyear) Cost to starta business (% of GNI per capita) - 275.4 Totaldisbursedandoutstandingportfolio 30 7 Time requiredto register property(days) - 58 of which IFCown account 30 7 Disbursementsfor IFCown account 18 1 Rankedas a major constraintto business Portfoliosales, prepaymentsand (% of managerssurveyedwho agreed) repaymentsfor IFCown account 0 0 ma. n.a. MIGA Gross exposure Stock marketcapitalization(% of GDP) 18.6 30.4 New guarantees -- -- Bank branches (per 100,000people) .. 3.3 Note:Figuresin italicsarefor years other than thosespecified. 2005 data are preliminaryestimates. ..Indicatesdata 11/15/06 arenotavailable. -indicates observationis not applicable. DevelopmentEconomics Development Data Group (DECDG) 24 Millennium DeveloDment Goals West Bank and Gaza Withselected targets to achieve between 1990and 2015 (estimate closest to dateshown, +/- 2 years) Goal 1:halvethe rates for $4 a day poverty and malnutrition - 1990 " 1995 a 0 0 ....--_I .,. 2004 Povertyheadcountratioat $1 a day (PPP, % of population) Povertyheadcountratioat national poverty line ("A of population) Share dincome or consumptionto the poorest qunitile(%) Prevalenceof malnutrition(% of children under5) 4 Goal 2: ensurethat children are ableto complete primary schooling -- I Primaryschoolenrollment(net,%) 96 86 Primarycompletionrate (% of relevantage group) 103 98 Secondaryschoolenrollment (gross, %) 81 94 Youth literacyrate (% of peopleages 15-24) 99 Goal 3: eliminate gender disparity in education and empower women .... __.. - Ratioof girlsto boys in primaryand secondaryeducation (%) 104 103 Women employed in the nonagriculturalsector (% of nonagriculturalemployment) Proportion of seats heldbywomen in national parliament (%) Goal 4: reduce under-5 mortality by two-thirds - - _l___l___ - __ Under-5 mortalityrate (per 1000) Infantmortalityrate (per 1 OOO live births) Measles immunizahon (propcfhonof one-year olds immunized,%) Goal 5: reduce maternal mortality by three-fourths --- _- 1~111 - Maternalmortalityraho(modeledestimate per 100,000live births) Birthsattendedbyskilled healthstaff (% of total) 95 97 Goal 6: halt and begin to reverse the spread of HlVlAlDSand other major diseases Prevalence of HIV (% of populationages 15-49) I ~ Contraceptiveprevalence(% of women ages 15-49) 42 Incidence of tuberculosis(per 100000 people) 36 23 Tuberculosiscases detectedunder DOTS (%) 10 1 .-__ proportionofpeoplewithoutsustainableaccesstobasicneeds Goal 7: halvethe -____-____ - _ _ _ _ Access to an improvedwater source (% of population) ~ 92 Access to improvedsanitationfacilihes (% of population) 73 Forestarea (% of total landarea) Nationallyprotectedareas (% of total landarea) C02 emissions(metnc tons per capita) GDP per unit of energy use (constant2000 PPP $per kg of oil equivalent) Goal 8: develop a global partnership for development - Fixedlineand mobilephone subscnbers(per 1,000people) 34 42 151 380 Internetusers loer t 000 oeoole) 12 46 Personalcomduters(per i,000 0 people) 48 Youth unemployment(% of totallaborforce ages 15-24) 35.6 42.6 Education indicators (%) I Measlesimmunization(96 of I-year olds) ICT indicators (per 1,000people) 100, 400 m a 2000 2002 2004 2000 2002 2004 +Primary net enrollmentratio DWe51Bankand Gaza ( ) CFixed+mobilesubscribers E3Internet users Note: Figuresin italicsarefor years other than thosespecified...indicatesdataare not available. 11/15/06 25