West Bank and Gaza – World Bank Country Assistance Strategy for the Period 2022-2025

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY ASSISTANCE STRATEGY FOR THE WEST BANK AND GAZA FOR THE PERIOD FY22-25

I. INTRODUCTION

1. This document outlines the World Bank Group’s (WBG) Assistance Strategy (AS) for the West Bank and Gaza (WB & G) for the period FY22-25, developed jointly by the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). It reports on the program’s implementation experience during the previous Assistance Strategy period (FY18-21). The proposed period for this new strategy is four years which will allow the program to maintain sight of a medium-term horizon to achieve development goals. This would also be consistent with the institution strengthening agenda that has been a central plank of the WBG’s assistance since the 1990s. The program guided by this Assistance Strategy is flexible to reflect the needs of operating within a fragile environment and allow adapting interventions to respond to evolving development priorities. Further, WBG support will continue to be selective focusing on achieving greater inclusion and sustainability, improving growth, and consistent with WBG twin goals of eliminating extreme poverty and promoting shared prosperity in a sustainable manner.

2. While only a final status agreement would bring rapid and sustained economic growth to the WB & G, World Bank analytical work has identified a multidimensional connectivity deficit as a crucial barrier to the Palestinian economy’s achieving its potential and generating jobs. The lack of connectedness is pervasive – emanating both from restrictions on movement and access1 that are outside the control of the Palestinian Authority (PA). These are, for example, access to Area C2, mobile spectrum, infrastructure and trade policy. Equally, there are weak connections between areas that are within the control of the PA, e.g., the isolation of the Gaza and the West Bank, disconnects between policies and reform agenda, between policies for public service provision and financial sustainability principles, and weak connections within the education system that leave a gap between Palestinian youth and the future of work. Furthermore, there is no Palestinian monetary policy and the PA is dependent on the New Israeli Shekel. These impede the Palestinian economy’s connectedness to domestic, regional, and global markets. The Palestinian territories, Israel, and Jordan share a common economic space, especially for water, transport, and energy. A regional approach by the WBG would benefit the Palestinians while also providing incentives to neighbors.