Grant Aid for Conflict Prevention and Peace Building for the Financial Reform of the Palestinian Authority through the World Bank

March 22, 2005

  1. The Government of Japan has decided to extend a $30-million grant aid for conflict prevention and peace building to the World Bank's West Bank and Gaza Public Financial Management Reform Trust Fund to help the Palestinian Authority with its efforts for financial reform. Notes to this effect were exchanged on March 22 (Tuesday) (March 21 (Monday) local time) in Washington, D.C. between Mr. Ryozo Kato, Japanese Ambassador to the United States of America, and Mr. Christiaan Poortman, Vice President of the World Bank.

  2. Since the clashes between the Israelis and the Palestinians in September 2000, the Palestinian Authority has been suffering a huge budget deficit because of the economic stagnation caused by the Israeli policy of "closure," which is blocking the movement of people and commodities into and out of the Palestinian territories. In May 2004, the Government of Japan extended financial assistance of $10 million for the Palestinian Authority through the Trust Fund (disbursed in September 2004). Because of the stagnant Palestinian economy, however, the fiscal situation of the Palestinian Authority did not improve and at an informal Ad Hoc Liaison Committee meeting held at the end of 2004, the Palestinian Authority requested budgetary assistance of $500 million from the international community. Budgetary assistance is therefore the most important field in the Medium Term Development Plan (2005-2007) of the Palestinian Authority.

  3. This grant aid for conflict prevention and peace building is to assist the Palestinian Authority, which has been tenaciously working on budgetary reform in a severe economic situation with the cooperation of the World Bank and others. The grant will be used to cover the current expenditures of the Palestinian Authority.

  4. This assistance is a part of the $600 million additional assistance of the FY2004 supplementary budget for the assistance of the Middle East peace process compiled on February 1 this year.

  5. It is expected that the present grant aid will improve the difficult budgetary situation of the Palestinian Authority and help its Government advance its reform.


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