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IMF says peace talks key to Palestinian economy

A Palestinian collects mint at a farm in al-Qarara, Gaza Strip, Feb. 2, 2014.(AP Photo/Hatem Moussa)

OCCUPIED JERUSALEM: The International Monetary Fund said Thursday that success in Middle East peace talks could boost Palestinian economic growth while failure could cause increased debt.

“A breakthrough in the peace talks could launch major donor initiatives ... which could boost average annual real GDP growth to about 6.5 percent in 2014-19,” said an IMF report on a Jan. 28-Feb. 6 visit by its officials to Palestine.

“On the other hand, failure of the peace negotiations could trigger a political and security crisis that would lead to accelerated arrears accumulation and economic contraction,” it said.

U.S. Secretary of State John Kerry coaxed Israel and the Palestinians to the negotiating table in late July 2013 for a scheduled nine months of direct talks that will end in April.

So far, however, there has been very little visible progress.

The IMF said that if talks continue inconclusively it foresees growth in Palestinian gross domestic product growth of about 2.5 percent in 2014.

It said that last year, GDP in Palestine grew by 1.5 percent, “reflecting the impact of uncertainty regarding the Israeli-Palestinian peace process and a sharp deterioration of economic conditions in Gaza.”

It was well below a September 2013 IMF forecast of 4.5 percent.

The IMF September report said the West Bank and Gaza Strip’s economic prospects were “dim under [the] status quo,” and said Israeli restrictions on Palestinian movement and trade must be eased in order for matters to improve.

 
A version of this article appeared in the print edition of The Daily Star on February 08, 2014, on page 4.

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