IMF praises Palestinian economic institutions

President of Palestinian Authority, Mahmud Abbas looks on in the Blue Hall of the presidental palace in Budapest on March 21, 2011.

Bob Moon: Israel is pushing back on the idea of Palestinian statehood. Officials in Jerusalem said today that Prime Minister Benjamin Netanyahu will press his German counterpart in a meeting later this week to drop plans to endorse a Palestinian state.

At the same time, the Palestinian economy has won a key endorsement from the International Monetary Fund. It concludes the Palestinian Authority has built the framework to conduct sound economic policies and supervise a banking system. Marketplace's Alisa Roth reports.


Alisa Roth: With everything that's been going on in the Middle East lately, it's been easy to overlook the Palestinians. But the IMF has been on the ground, and it reports some economic progress.

The IMF says the Palestinian Authority is ready to handle the economic side of statehood. It has managed its budgets and built credible institutions, such as the Palestinian Monetary Authority, or PMA, which has taken on the role of central bank.

George Abed ran the PMA from 2005 to 2007. In that job, he helped implement a lot of changes.

George Abed: PMA has established its credentials as a very robust and efficient and effective institution in licensing and supervising banks and in maintaining good credit flow to the private sector.

The PMA can't do something else that central banks do, which is manage the currency, because the Palestinian Authority doesn't have its own currency yet.

The Palestinian economy grew 9 percent last year. But there are still big question marks, like high unemployment and Israeli controls on movement of people and goods. Edward Sayre is a professor of international development at the University of Southern Mississippi.

Edward Sayre: The ability to control its borders to determine the direction of trade is something that is critical for any geographic entity that wants to become a sovereign economic country.

When the U.N. General Assembly meets in September, the Palestinian Authority is hoping to win a resolution to be recognized as a state. And it hopes this IMF report will help.

In New York, I'm Alisa Roth for Marketplace.

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