- Project Context, Development Objectives and Design
1.1 Context at Appraisal
The Second Emergency Municipal Services Rehabilitation Project (EMSRP II) was presented to the Board of the World Bank in December 2006 and became effective in February of the following year. It succeeded an earlier emergency rehabilitation project (EMSRP I, $19.9m, FY03). The latter, in turn, was one of several other Bank projects developed in response to the severe political, economic, social, and institutional crisis that engulfed the West Bank and Gaza (WBG) following the onset of the Second Palestinian Intifada in September 2000. While some progress had been made since 2000, the Palestinian situation remained very difficult: the economy continued to contract, with real GDP per capita remaining well below its 1999 level; unemployment remained high at 25 percent; poverty continued to increase, to an estimated at 41 percent by the end of 2006; and the movement of people and goods continued to be severely restricted by stern Israeli military measures, with exports from Gaza having dropped by 40 percent over already low 2005 levels. As a result municipalities continued to experience sharp declines in their revenues; spiraling payment arrears; and the accelerating degradation of infrastructure and services already seriously damaged during the Intifada. This was even further complicated by the Hamas political party (on the terrorism lists of several donor countries) winning a majority in the Palestinian Legislative Council in March 2006 and resulting severe difficulties for donors in continuing to provide funds to WBG. In sum, the context in WBG at appraisal was one of deep and worsening crisis.