4Z5009 1_ Z l U ! T D A I K1 Z A Quarterly Publication of the TVV C I / A i \ West Bank and Gaza Office AND GAZA August2002 UPDATE The World Bank Group The Palestinian Authority's (PA) Reform Agenda Donors Mobilize To Supporl, Advance Donor capitals that their financial support is indeed PA Initiattive being used in the most effective and efficient manner), the Reform Agenda includes a number of specific The Palestinian Authority issued its "100 Days Plan measures in the area of fiscal management to be of the Palestinian Government" on June 23, 2002. implemented within the first 100 days - many of which The Plan describes how the Government intends to have been accomplished ahead of schedule. make the Palestinian Authority "more efficient ancl effective in the service of the national goocl". (For a summary of the Plan, see Box.) Domestic Consetsus In Support Qf A local task force was established in order to support Reform and advance this initiative, as well as to monitor its With the curTent emphasis being placed on a neecd implementation - including the identification of for Palestinian reform, it is easy to overlook the obstacles that stancd in the way of its successful notable achievements in developing Palestinian achievement. On behalf of the International Task administrative and institutional capacity that occurrTed Force on Palestinian Reform (the so-called "Quartet in the period since Oslo. Institutions were created, plus Four" consisting of the European Union, Russia, ministries and agencies staffed, and essential the United States, and the United Nations, plusJapan, Govemment services provided. Notway, the Intemational Monetaiy Funcl, and the Uncierstandably, in such a setting, a number of Wolid Bank) and working closely with the members inefficiencies and redundancies in administrative of the PA Ministerial Reform Committee, bencluharks structure resulted. Nevertheless, prior to the Intiflida were identified by which progr-ess will be measured and the subsequent institution of internal closures on each- Reform Agenda item. To this end, "Reformll and curfews, as well as external closures, progress Support Groups" have been established in seven was real, if undoubtedly incomplete. areas:(i) financial accountability; (ii) ministerial and More importanty, at the same time there also existed civil service reformi; (iii) marlket economics; (iv) a lestin' judiciary/rule of law; (v) local government; (vi) civil thea g A,l cnd esu Pales tiiave Council (sLC), society; ancl (vii) elections. C ) One of the primaxy functions of these Reform Support Groups is the identification of appropriate l)onor instruments for providing the necessary technical _ assistance and financial resources, which would be "100 Days Plan of the Palestinian Government 6 required both immediately and in the medium-term. lRecent Ec,nomic Developments 7 Recognizing that greater accountability and Bank Group Operitions 1n transparency in expenditure management is due the lIz:nk G>tip News 23 Palestinian people (and would go far to reassure New Bink Publications 25 LAY-E.PM5 1 4I 10131102,1:09 PM __ rTT + _[[ and the international Donor community on the need the areas of institutional reform and good govemance, for further institutional development. This included particularly in the areas of fiscal management, reforms in the areas of: governance, accountability, economic policymaking, civil service anci transparency, responsiveness, and efficiency of public administrative capacity building (at both the national services. While there was some divergence of opinion and municipal levels), and development of a legal regar-ding the pace or sequencing of particular steps, environment conducive to private sector activity. there was general agreement on the path a reform Other areas, such as support for presidential, program would take. This consensus is even stronger legislative, and municipal elections and refonn of the toclay. security apparatus, are largely being pursued on a Genuine administrative and financial refor-m cannot bilateral basis. be imposed from the outside; it must be domestically driven, deriving from the wishes of the Palestinian Thle World Bank Program people and their leadership. Palestinian civil society World Bank technical assistance and operational and public opinion has strongly supported such support is being focused around four areas: (i) endeavors. Public opinion polls lhave shown near financial management and economic policy-making; unanimity on the need to uproot corruption, base (ii) public administration and civil service reform; (iii) public sector employmiient on qualification and miienit, strengthening local govemment; and (iv) private sector achieve a more efficient justice system, and improve development. Over the coming six months, the performance of ministries. There was simiiilar considerable analytical and diagnostic work will neecd support for a stronger role for local Government, a to be undertaken in these areas to ensure that critical more democratic clecision-making process, aind wider work is adequately funded and that PA decisions are participation in Govemment policy. undertaken with the benefit of rigorous supporting analysis. Actual implementation of reform initiatives PA And PLC C(o0mniitmetnts in these areas can reasonably be expected to take In recent months the Palestinian Authority and the two- to three-years. Palestinian Legislative Council have explicitly committecl themselves to a number of important Financial Management And Economic reform measures. In the March 2002 World Bank lic fMk- publication, 'Fifleen Months - Intifada, C'losures and Polc t<-Making pallicstionia Economic Mons - Antas m," thes Pa Broad-based public sector rationalization is a key Paledgditself tconomc m sres iAn Assexpmendtur1the PA element in fiscal reform. Improved management of management, planning, and aid coordination the civil service is critical to achieving fiscal discipline, esigned to cope with the current emergency, as well cbudget controls, accountability, and effectiveness ancl clesinectto coe wih th currnt eergeny, a wel efficiency in the operation of Government programis. as a number of structural measures that advance the medium-termn policy ancd institutional agenda. Nevertheless, public financial management may be On March 16, 2002, the PLC affirmed its commitment significantly improved in a number of key ar-eas for a number of PA institutional refor-m measures independently of civil service reforn. This applies clesigned to improve triansparency of Government in particular to such weaknesses as repeated spencting operations, greater accountability, ancd constitutional in excess of budgetary allocations, faiure to issue and judicial reform. payments to line ministries or settle debts in a timely manner, thus constraining operating budgets and Thus, the appointment by President Arafat of the building up arrears, severe delays in issuing VAT Ministerial Reform Committee to produce an agenda refunds, thus discouraging private sector investment, of refonr measures is but the most recent in a series ancl cdelays in finalizing and reporting the public of domestic refoim initiatives. accounts. Sound budgetary and financial management practices Donor Support r equire that the budget be comprehensive and inclucle Discussions among the Donor community quickly all revenues and expenditures; otherwise there can showed that there was considerable willingness to be no assurance that scarce resources are assigned to collectively aclvance a number of agenda items in priority progr ams. The creation of the single treasury August 2002 2 LAY-E.PMS 2 1013/102,1:09 PM account, the inclusion in this account of revenues in need of strengthening. On the basis of suchl a formerly outside the budget, and the cancellation of review, a package of technical assistance to build ministries ability to finance operations through capacity in the identified areas of weakness might be independent revenue sources will go far towards sought. meeting this objective. Particularly in the current situation during which Public enterprises, as well as othel PA equity economic activity is declining and economic units investments are being transferred to the newly are shrinking rather than expanding, strengthening established Palestinian Investnent Fund (PIF). The the capacity of core institutions to monitor events, release of audited details of the PA's private sector evaluate data, and clevelop appropriate equity holdings in 2000 was an important step towards macroeconomic policies - be they fiscal, monetary, greater accountability. Going forward, the regular t-ade and compettiveness, labor, or public investnment publication of PIF revenues ancl expenditures as part - is critical. of the public accounts will further signal the PA's Improving the performance of core economic functions commitment to transparency in financial operations will involve considerable upgrading of ministry systems ancd thereby help boost public and inter-national and staff skills that can only take place over time and confidence in PA financial management. should only be done within the context of a Expenditure management capacity at the Ministiy of rationalization of the functons and responsibilities of Finance is being strengthened through the adoption the three core economic ministries: the Ministry of of several other measures and procedures. Moving Finance (MOF), the Ministry of Planning and to the medium-term, the adoption of a modern, Intemnational Cooperation (MOPIC), and the Ministry automated financial management system, Govemment of Economy, Trade, and Industry (MOFTM). Financial Management Information System (GFMIS), would pr-ovide rapicl, comprehensive data for- regular Public Administration And Civil Service r eview of revenues, expenditures financing, transactions, cash balances, and spencling versus Reform budget allocations. In February 1999 the World Bank produced a Such a system would not only help in gaining better comprehensive report, Strengthening Public Sector control of expenditures, but also in increasing Management, which called for improvements in a efficiencies and effectiveness in policy and progtam number of areas, particularly in the civil service implementabon that could be expected fromii adopting incentive and personnel management structure. a medium-term framework for planning. In the words of the study, excessive and unplanned Adopting as a goal the linkage of spencling priorities hiring "imay be ascribed it the first instance to a lack ancd investment plans over a specific timefirame with of ministerial organization charts and job descriptions realistic financing projections means developing or and overlapping responsibilities among ministries... increasing capacity in such functions as economic Similarly, the failure to clarify ministerial mandattes forecasting, debt management, ancl integrationi of may mean that the authorities prefer to leave capital and recurrent budgets for this goal to be ministerial responsibilities deliberately vague in older actualized. The World Bank is reacdy to provide such not to hinder job creation."' support. Furthermore, the lack of clarity in the roles and the Over the next few months the World Bank will be overlap in responsibilities between the various PA jointly conclucting with the PA a Countiy Financial ministries and agencies has, in a few instances, Accountability Assessment (CFAA) - a diagnostic tool resulted in a delay or even the cancellation of Donor- for enhancing financial accountability arrangements funded projects. in both the public and private sectors. Typically, a The recent reduction by one-third in the number of CFAA's public sector component focuses on ministers presents a unique opportunity for fuLther- budgeting, accounting ancl financial reporting, internal control systems and records mnliagement, public sector auditing, legislative scuLtiny of public sector financial management, and public access to ' Wecst Banc &GcazaeSixonpi?zbe,ingp fublic SectoraMaitagmcanlt S,,ocil infonyation, with the idea of pinpointing specific areas The World Bani/ 1999, page 26. Auigust 2002 3 LAY-E.PM5 3 + 1013/102, 1:09 PM rationalization. Ministerial mandates need to be is understandable. Yet the deeper the centralization, clarified with overlapping authoriities and even if entered into with the intention of later reversal, reclundancies removed, as recommended by the PLC the more difficult will be any subsequent Budget Committee and the Tripartite Action Plan of decentralization. October 1999, and numerous subsequent studies. Notwithstanding the legitimacy that would accrue Enabling legislation neecds to be passecl to clarify through periodic municipal elections, st-engthening ministerial responsibilities, convey the authority to local government is also about finding means to hold establish operational policies, and to develop sectoral municipal authorities accountable. The multiplicity regulations. of govemance structures has not helped (many new Flowing naturally fi-om the identification of ministerial municipalities and village councils appear to halve functions and required organizational structure, such been established for political reasons, without regard "strategic reviews" would then be extended to for financial or institutional capabilities). So long as determine the real personnel needs and budgetary the municipal authorities receive fees mainly hy requirements, allowing for improved service cdelivery transfer from the central authority rather than taxes and eventual "right-sizing". from local constituencies, accountability will be further- At the same time, as work on the administrative impeded. elements of the civil service (e.g., establishing unified, At the same time, local govemments can and should merit-based, open, and transparent recruitment, increase their revenues by improved management of compensation, benefits, and promotion procedures) user fees. When and where such direct fees are moves forward, development of a unified pension inappropriate, local governments need to have access system that is financially sustainable and covers all to a suitable tax base. Property taxes are appropriate public employees needs to progress. Such a system for such purposes, and should be reserved exclusively is a prerequisite for implementing a successful for local governments'use. The Palestinian Authority program of civil service restructuring that is has agreed to hand over the administration of property commensurate with ministerial ancl agency taxes to local governments; such transfer should be requirements, and protective of the PA's fiscal position. accelerated. Similarly, recognizing the existence of Improvements in public service delivery are another regional disparities in local tax bases, the PA shouldl core objective of public administrative reform. This devise an appropriate financing system, possibly involves increasing the management roles of through "equalization" transfers, in order to ensure government in determining policy, setting service equity and efficiency in providing essential services. standards for government and non-government The Ministry of Local Govemment (MOLG) will neecl providers, and planning and regulating service to play a lead role, along with other relevant provision - all of which require strengthening the authorities, in assuring proper financial management capacity of ministries and agencies to effectively and accountability. Looking foiward, MOLG shouldc supervise, monitor and evaluate, and to concluct also prepare to expand municipal boundaries once policy assessment. this is possible politically in order to alleviate overcrowding and congestion, and to plan Strengthening Local Government appropriately for the delivery of new infrastructure The inability of the Palestinian Authority to invest in and services. Urban planning, including master plans, capital development since 1994 only reinforces the commercial and residential districting, traffic management, and the like, will all be urgently needed, argument for increasing the fiscal base, institutional folwn upo year ofpeeelad iie fot capacity, and political autonomy of municipalities at followng upon years of pkecemecal and limitec effonoLs alllevl-sandinallregons Th bLIne o th -the consequence of key physical and economic all levels and in all regions. The balance of the resources being outside the control of either the relationship between central and local governmiient has yet to be setled comfortably; in a highly unstible municipality or the PA. political situation, the tendency of the PA to centralize government - r eflectecl in central control over revenue Private Sector Development collection, financial management and controls, and The fundamental prerequisite for improving the reliance on appointments by the Ministiy of Local environment for private sector investment and Government, especially at the village council level - economic activity in the West Bank and Gaza is the August 2002 4 LAY-E.PM5 4 10/3/102,1:09 PM reduction of political instability and the return to needs to be drafted. Major strides could be rapidly unfettered movement of goods, services, and achieved simply by completing the substantial backlog individuals. Only in such a context will the private of draft laws awaiting parliamentaiy consideration sector be able to achieve its potential for job creation and presidential endorsement. These include the: and dynamic, sustainable economic growth. Until Income Tax Law, Compelition Law, Companv Law, then, recoveiy of the private sector will be halting at Intellectual Property Law, Securities Law (Capital best; Donor-supported interventions such as the Markels Authority Law), Insurance Law, Secured proposed Private Sector Crisis and Recoverv Fund, Lending and Leasing Law, International Commercial while helpful in assisting in the process of private Arbitration Law, Rental Law, Pensions Law, Banking sector revival, will be limited in their effectiveness. Law, Provident Funds Law, Mutual Funds Law, and There remain a number of steps that need to be taken Accounting and Auditing Law. in order to improve the institutional framework and The need to strengthen the regulatory environment the current and future environment for productive is pressing, and particularly necessary for the deeper private investment in Palestine. Arguably the most development of financial intermediation in the West important of these are measures designed to create Bank and Gaza. an appropriate legal framework for commercial The Country Financial Accountability Assessment, activities and an effective, independent judicial system mentioned above in the context of public sector to implement and uphold laws and regulations, finance, also has a private sector component, one contracts, and property lights. aspect being a review of private sector financial Such measures can significantly reduce the uncertainty accounting and auditing practices. Other areas that and related costs of doing busin,ess. Studies show would be reviewed involve corporate governance and that differences in the quality of the institutional disclosure rules and other aspects of financial framework explain a large part of the differences in accountability for publicly traded companies. economic development among countries. Indeed, In addition to the salutary effect increased accounting the importance of a sound institutional fiamework and auditing standards would have on financial well exceeds the attraction of specific incentives for intermediation, business lending could also be investment. Experience in other cleveloping countries increased by increasing the categories of assets that suggests that an emphasis on tax and other incentives are eligible for use as collateral for loans. Similar ly, to encourage investment in export-oriented removing obstacles preventing clear titling anid manufacturing industries, in the absence of sound registration of land would increase liquidity in the macroeconomlic and framework polices, has hacl real estate sector, as well as support further- business- disappointing results in promoting growth. related finance. From a governance perspective, creating a firm-l Completing the preparation of the framework for foundation of "economic legality" - laws, rules, and private sector development in advance of Palestinian regulations that are consistent, widely disseminatecl statehood is imperative, given the challenges ancd and accessible to the public, broadly consistent with opportunities that statehood will present. With global norms, and applied and enforcecd uniformly independence will come a heightened need to by institutions of integrity - remains the over-arching generate jobs and investments associated with start- task. up and refugee absorption costs. While statehood is While much has been done to fill the gaps in needed likely to be associated with a significant influx of commercial legislation in recent years - the Agency assistance and compensation funds, without an Law, Investment Fncouragement Law, Industrial appropriate framework, the return on such flows will Zones Law, DomeslicArbitration Law, Condominium be diminished and a one-time opportunity Law, and Labor Law - gaps in implementing squandered. regulations remain, and additional legislation still Autgust 2002 5 LAY-E.PM5 5 10/3/102, 1:09 PM I - _STTTn +l "100 Days Plan of the Palestinian Government" Released on June 23, 2002, the Palestinian Authority's (PA) Reform Agenda expressed the commitment of the Palestinian Govemment to a broad program of reforms. Because a number of specific measures were identified to be implemented witlhin 100 days (while implementation of all other measures would be initiated so as to have a "tangible and visible" effect within three months of the Plan's adoption), the entire Refonn Agenda has come to be known as the "100 Days Plan of the P'alestinian Government.' The Refonn Agenda items are summarized here: In The General Domain: 0 Develop the process of preparing the general 0 Reinforce separation of powers of the legislative, budget to include recurrent and developmental executive, and judiciary branches of govermnent; expenditure; o Restructure and modemize ministries and 0 Develop a monthly expenditure plan for the government institutions; remainder of 2002; G Prepare for municipal, legislative, and presidential 0 Begin preparation of the 2003 Budget; elections; 0 Reorganize the financial relations between MOF a Put into force all laws that have been passed; and tle municipalities/local authorities. O Improve the standard of living, particulally of the unemployed, and other segments of society lhaL. live in dire conditions; in The judicial Domain: o Rebuild the infiastructure that has been destroyed 0 Strengthen the judiciary, through appointment of by the occupation; judges and development of infrastructure 0 Tend to the needs of the wounded, families of 0 Implement measures required by the Judiciaiy those killed during the occupation, prisoners, and Law; detainees. a Prepare draft laws, decrees and decisions to accompany the Basic Law; EJ Establish the Government Legal Cases In The Domain Of Public Security: Administration to handle cases to which the o Restructure and modemize the Ministry of Interior; Government is party. , 01 The Ministry of Interior is to be in charge of all matters relating to internal secuLity; 0 Activate the role of the Ministry of Interior in the In Other Domains: enforcement of court rulings; 0 Reinforce Palestinian values, including the spirit of 0 Respond to the expectations of the people for democracy, enlightenment, and openness; safety, order, ancl respect of the law 0 Activate the role of the Ministry of Awqaf to seive o lmprove discipline in the security services and national and religious objectives; strengthen social control; 3 Resolve the financial crisis of the universities, 0 Reinforce the loyalty of the security services to the schools, and hospitals; job, the PA, and the country; 0 Review Goverinent institutions that oper-ate 0 Raise awareness of the pOpu.latiOnl to the outside the jurisdiction of the ministries with a measures above and secure their understanding, view to attach or incorporate them within the cooperation, and support. Xinistries; a End the role of the security services in civilian affairs; in The Financial Domain: Um Improve employment policy, to prevent an X Reform operations in the Ministry of Finance; inflated civil service; o Deposit all incomes of the PA into a single O Unify and develop institutions - and promulgate account of the Treasury; laws - that encourage investment; * Manage all commercial and investment operations It Improve the training and conditions of through a Palestinian Investment Fund, which is employment of human resources; subject to stringent standards of disclosure and a Increase the effectiveness of the Palestinian audit; diplomatic corps; * Limit expansion of employment in the public * Rebuild the management boards of Government sector and unify payroll administration uncler the institutions according to the law; Ministry of Finance; * Pay special attention to the pollution of the * Modernize the pension scheme; environment o Strengthen internal ancl extemal auditing; August 2002 6 LAY-E.PM5 6 10/31102,1:09 PM I*_ + C _ Recent Economic Developments The combination of intemal and extemal closures led to a sharp increase in transaction costs, which reduced 0 Economic Output. productivity and competitiveness of Palestinian fimls, as well as the overall, adjustment capacity of the Very limited statistical infonnation on the Palestinian l'alestinian economy to the decline in demand. In spite economy precludes in-depth quantitative analysis of the of a higlh and growing unemployment, prices ancl wages iimpact of the restrictions on movemrients of goods and did not sufficiently adjust downwards, which bears a people and dte destructions of physical capital.' But all hligh cost for the economy and society as a whole, indicators up to end-March 2002 indicate a strong notably in terms of equity (poverty) and aggregate recession of the Palestinian economiiy since September purchasing power. In turn, the substitution away of 2000. Economic losses, in terms of foregone output and imports in favor of domestic goods remained relatively impoverishment of the population are huge, not to miodest: the ratio of imports over GDP went down froml mention humanitarian costs. 71 percent in 1999 to 68 percent in 2001. This is a result Slightly revising its macroeconomic figures on the basis of the high dependency of Palestinian production on of additional statistical information for 2000 and 2001, imported inputs, which leaves little possibilities of the World Bank estimates that per capita GDP declined substitution in the short run in favor of domestic inputs. by 24 percent between 1999 and 2001, while GNI per Thie Palestinian Authority and, to a lesser extent, capita declined by 29 percent during the same period, Palestinian households nevertheless managed to .see Figure 1. maintain minimum levels of consumption. The former Figure 1. Real GNI and GDP per capita by indebting itself (on the back of the private Palestinian and Israeli sectors and the donor community), the latter 110- by depleting their private savings. The donor community 100- also helped to a significant extent cushioning the 90o- ~ \negative impact of the crisis on living standards by 80- sustaining public and private consumption. But this 40 X inevitably-produced negative effects on available savings 60- 50 * and investments, which, once combined with the severe 40 , -Real GNI percapita (index 100=1994) physical damages causecd on infrastructure and 30 R GDP percapita (index 100=1994) productive capacities by the conflict, led to a large 20-G P per capita (index 100=1994) decline in the per capita capital stock level. This would 10* definitely affect the capacity of the Palestinian economy o to eventually rebound should conditions be met one cr a, so r- X , a ao o day. Sotrce. World Banik 1 'stimates. Date cvcludesl ast Jernsal-en The estimated social cost of tlle crisis is huge in itself. But it is also high compared to the ones observed during Many factors explain this very inferior economic recent crises in other parts of the world. In Indonesia perfonnance, most of them obviots to even the most for instance, the poverty rate jumped from 11 to 19 casual observer of the situation in West Bank ancl Gaza. percent during the financial crisis of 1998. In Ecuador, Restrictions on the movement of goods and people El Nino increased incidence of poverty in affected areas ("closures") have had a profouncl negative effect on by more than 10 percentage points.2 In comparison, economic activity across all sectors, as it has redluced the World Bank estimates that the share of population the overall productivity of the Palestinian economy, below the poverty line of approximately US$2 a day through a number of clhanniiels: external closures cdried increased by some 20-25 percentage points since up workers remittances, which entailecl a negative September 2000 in WBG. The much stronger response multiplier effect on the demand for domestic goods. in WBG compared to other places is probably because See World Bank (20012), 15-monbth Itttifada, Closure antd Plalestiltian a See World Bank (2002), 15-moUlbh Itadtfaca, Clasure anrd Pa/lanaantiia h:conotnic Crkvis, At avsswnsment, for a detailed description on closures counonic Cnris&, Ant assessment, ft,, a detailed description on closuies antid physical destruction hetween September 2000 and December 2(X)1. and physical destruction between Septembel 2000( and December 2001. Auigust 2002 7 LAY-E.PM5 7 10/3t102. 1:09 PM of the unique nature of "closures", which has devastating countries) of the l'alestinian population before the crisis iipacts on the economy and reduces at the same time was clustered just above the poverty line, and fell below the capacity of the economy to cope with it (see below). with the crisis. In addition, a very large share (compared to other Table 1. Estimated Macroeconomic Trends, 1998-2001 1998 1999 2000 2001 Gross National Income (GNI), US$ mill. 5,058 5,166 5,419 4,503 Gross Domestic Product (GDP), US$ miiill. 4,230 4,289 4,607 4,014 Real annual change: GNI per capita 7.7% 3.9% -7.5% -23.2% GDP per capita 3.90/o 3.1% -5.3% -19.5% Private Consumption 9.0% 7.5% -5.60/o -14.0% IPublic Consumption 7.0% 20.3% 31.0% -1.6% Total Fixed Investment 8.4% -8.3% -28.3% -82.2% Export 6.60/o 2.3% -8.8% -17.9% Import 7.4% 5.4% -16.2% -29.3% Other items Poverty, share of population below poverty line 23% 20% 31% 44% NIS/US$ , annual average 3.81 4.14 4.08 4.21 CPI, annual change 5.6%0 . 5.5% 2.7% 2.1% 4l Annual Closure days 26 16 75 210 Population, mid-year (1,000) 2,731 2,842 2,966 3,096 ources. World Banzk Staff Calculation, PCBS, UNSCO. A'ote All cdata excludev ELlja enrvalen. Besides, the decline in economic activity and incomes in Israel, the depreciation of the NIS and the tightening in 2000 and 2001 has most likely been severely of Israeli fiscal policy can only produce negative aggravated by recenit developments on the ground. First, outcomes for the Palestinian economy in the short run. the military operation launched by Israteli military forces As of July 2002, prospects of economic recovery are on March 29, 2002 resulted in massive destruction3 of desperately grimn. The World Bank projects that under infrastructure and productive capacities; seconcl, the current conditions Real GDI' ancl GNI could decline a frequent imposition of curfews in major Palestinian cities further 20-25 percent in 2002 compared to 2001. literally freezes all kind of economic activities, be it trade, Productive capacities and markets have been lost, some consumption or production; third, tighter internal and of them permanently. Households, firms and the extemnal restrictions imposed on the movement of goods Palestinian Authority have adopted strategies which have ancd people further hampers econoinies of scale and proven to be efficient in coping with the crisis, but most specialization, and dries up the possibility of generating of them look unsustainable in the medium run. incomes abroad; fourth, the decline in economic activity In such circumstances, foreign assistance, though useful and timely, can just maintain minimum welfare and I The World B3ank estimatedl that physical dalmarges resulting from the cannot pretend fostering economic recovery. Only a Isra.eli military operation in NMarchi 2002 amncount tco sonme US$ 350, to he resolution of the Israeli-Palestinian conflict accompaniied adcled to the US$ 300 million of physical damages incured since the beginning of the conflict. This is roughly equivalent to 10 pelcent of rotal by a profotind change in the Palestinian economic productive capacities. environment can encourage it. August 2002 8 LAY.E.PM 8 _ 10/3/102,1:09 PM E ±-Ti O Foreign Trade. Figure 2. Trade with Israel (Index 100-Q1 98) Trade plays traditionally an importatnt role in the small 130 and open Palestinian economy. As of 1999, imports of 120- A final goods, services, equipment ancl intennediate inputs 110 represented approximately 70 percent of GDI'. Exports too of goods anci services represented less than 20 percent 90 \ of GDP. Looking at recent trends in trade is important 80 in itself, given the importance of the sector in total GDI', but also because it might give some indirect insights on -Imports from Israel -U-Exports to Israel final consumption, producer costs, and external 60 X C g08 0 .- 0 competitiveness. N NN competitiveness. -~~ a a c a a a a a c 0 a a a N a a a Trade is unfortunately badly registered, as most of it takes Soir,rc Israeli Centtral Bureau of Statistics. place between the West Bank and Israel, where no custom stations exist (in contrast to trade between Gaza and Compared to 1999, both exports and imports cdeclinecl Israel). 11e Israeli Central Bureau of statistics nevertheless by approximately 30 percent in value (expressed in estimates such flows, and we rely on their data to depict current US dollars). This probably meanis that imports the evolution of trade since 1998. This only covers volumes declined more than 30 percent, under the likely Palestinian trade with Israel, and not with the rest of the assumliption that the domestic price of imported goods world. However, trade widt Israel represents the bulk of increased since 1999 as a result of significantly higher total P'alestinian trade4 - although a significant share of transaction costs (World Bank, 2002). At the same time, imported goocLs fiom Israel actually originates in third it probably also means that the consumption of both countries, the so-callecl "indirect imports". Finally, and intermediate and final Palestinian goods in WBG even after accounting for the depreciation of the New declined by no more than 30 percent, as the later became Israeli Shekel in early 2002, there is no strong reason to cheaper compared to imports. The relative change in believe that the share of trade with Israel in total trade demand for imported goods and domestically plroduced significantly changed with the intifada. goods obviously depends on the extent to which goods There is no doubt that foreign trade suffered are substitLtable across origin. But the increase in extraordinarily from the closures, due to the extremiie transaction costs, largely documented (see also the difficulties in reaching markets outside the West Bank section on prices below), as well as increased and Gaza. Various indicators point to stibstantial decline consumption of own produce suggest that imports in both imports and exports. The decline in import declined more rapidly than the consumption of domestic appeared almost immediately after the otItbreak of the goods. Intifada, in step with the decline in remittances (see Coincicdentally, the reported decrease by the Israeli below). In 2001 and early 2002, imports declined less Central Bureau of Statistics of US$ 490 million in the rapidly, and were by end March 2002 at about 50-55 Palestinian trade deficit with Israel between 1999 and percent of their pre-intifada levels of September 2000 2001 is almost similar to the reported decrease in workers (in value tenns), according to data fiom the Israeli Central remittances from Israel. Finally, the significant drop in Bureau of Statistics, see Figure 2. exports give little credit to the idea that the Palestinian The decline in exports has been more gradual, reflecting recession is only driven by a decline in domestic clemand. continuing loss of market shares abroad. By the end of Demand in intemational markets for I'alestinian products March 2002, data from the Israeli Central Bureau of had no reason to significantly decline over the period. Statistics suggest that export was 30-35 percent lower But the competitiveness of Palestinian products abroad than immediately before the Intifada, see Figure 2. have most likely been affected by higher transaction costs (in particular transport costs) and more expensive imported inputs. Besides, producers might have In 1998, imports from and vi:, Israel represen1ted 75 percent o,f total substituted part of their production away from extemal imports, while exports to Israel represented 96 percent cf total exports markets to provision domestic ones, easier and less costly (Astrup and Dessus, 2001, Trade Options for the Palestinian Econioilmy: Soiie Orders of Magnitude, MENA Discussion Paper Series, 21, The World to reach despite lowered demand. Bt3nk). fAiugust 2002 9 LAY-EPM5 9 10/31102, 1:09PM o Fiscal Accounts. certain non-salary expenses. The fiscal situation of the Palestinian Authority continues By the end of March 2002, the PA had accumulated at to be in dire straits, in spite of the extraordinary bucdget least US 490 million in arrears. This level of arrears has support from the international community. had a pernicious impact on the private sector, resulting The fiscal accounts have been severely impacted by the in an acute liquidity shortage, mounting non-perfonning crisis, via three main channels. First, the sharp clecline loans in the banking system, and increasing cases of in PA revenue collections associated with the decline in insolvency. Vendors have felt compelled to continue economic activity and the disruption of tax providing-credit, but many have reached a point where administration; second, the suspension since December they are no longer willing, or able, to do so. Settling 2000 by the Govermment of Israel of the transfer to the thlese arrears will be a matter of top priority once Israel PA of the revenues it collects on the PA's behalf (the hands over the withheld clearance revenue (US$590 so?called clearance revenues); and third, the increase in million in gross terms owed as of end-March 2002). emergency expenditures. Since March, the PA's fiscal situation has further Central government revenue fell from a monthly average deteriorated, as disbursements from the Arab States have of US$83 million in 1999 to US$23 millioon ly Q1/2002. been falling behind commitments made at the most This collapse in tax revenue was to a large extent rcccnt Arab League Summit. For the four-month period compensated by emergency budget support from donor April-July, commitments totaled US$220 millions, or countries, of which the PA received 735 miillion between US$55 millions per month, but disbursements only November 2000 ancl end-March 2002. TIis left an average reached about US$116 millions. Israel's decision in early mnonthly budget deficit of approximately US$23 million, August to transfer some of the withheld clearance which has been managed through a combination of revenue was a positive sign, but the approximately US$15 accumulating arrears to suppliers, taking occasional loans million transferred so far is not nearly enough to fill the from domestic banks, and delaying the payment of gap, and the situation is clearly not sustainable. Table 2. PA Fiscal Accounts - Monthly Average (US$ million) 1999 2000 2001 Jan-Mar 2002 Revenue 83 77 23 21 Domestic 31 29 23 21 Clearance 53 49 0 0 Current expenditure 79 99 91 90 Wages 44 52 57 55 Non wages 35 48 35 35 Of which: emergency expenditures 0 6 13 22 PA-financed capital expenditure 0 1 2 3 Recurrent balance inclucling PA-financed capital expenditure -4 -23 -70 -72 Financing 4 23 70 72 Expenditure arrears (net accumulation) 1 5 23 21 External budgetary financing 5 44 51 Arab states 0 3 36 42 European Union 0 2 8 9 Norway 0 0 1 0 Domestic bank financing and residual -5 13 3 0 Mnemorandum items: Stock of withheld revenue clearances (end of perioc) 0 . 10 507 588 Stock of expenditure arrears (end of period) 90 155 430 489 PA employment (in thousand employees, end of period) 104- 115 122 123 Sources: Palestinian A1t4hoil-v (PA) anid IMF slaff estinates. August 2002 10 LAY-E.PM5 10 10/3/102, 1:09 PM O Labor Markets. Figure 3. Total Employment in West Bank Employment sharply declined in Q1-2002, after and Gaza (index 100=Q3 2000) stagnating most of 2001. This decline affected only 105- Gaza WestBank workers from the West Bank, working eidter in the West 95. Bank or in Israel and Israeli setdtements (ISI). In total, 85 19,000 jobs were lost in Q1-2002 (10,000 in dte West Bank, 9,000 in ISI) compared to the previous quarter 75- for West Bankers. By contrast, Gaza, whose employment 65 / 4_ / levels had been particularly affected during the first V months of the crisis is regaining progressively some of - . its losses (see ligure 3-. This, most likely as a result of a c a a a~~~ stronger deterioration of the economic environment in Soure World Bank estimates based on PCBS. Note: The emplrvmnt West Bank compared to Gaza. figures reported differsfrnn thosepublished bv the PC3S, as tbey excludc the estimated iutunber o)f emnploved persons int East erusalem. Total employment includes x)rkers in IS. Table 3. Number of Palestinian Jobs (thousands) Q3 95 Q3 00 Q4 00 Qi 01 Q2 01 Q3 01 Q4 01 Q1 02 Workers in West Bank 233 327 300 276 298 297 298 289 Workers in Gaza 107 164 120 125 127 129 134 138 Workers from West Bank in Israel 53 98 21 50 54 41 47 37 Workers from Gaza in Israel 4 30 3 4 2 3 2 2 Total 397 619 445 455 481 470 481 466 Source, WVrorld Banlk Lstimates based ot PCBS. Note: 7he emiploymentfigures reported digfersfn)m those publihed by the PCBS, as they exclude the estimated ,utn,ber of enployed persons in Eastt.enrsale,n. In Q1-2002, Gaza experienced a slight increase in Bank in total active population, the unemployment rate employment. In net terms, some 4,000 jobs were created in the Palestinian Territories rose from 26 to 29 percent in Gaza, most of which in agriculture. The number of during this period (see Figure 4). Gazan workers in ISI (mainly employed in industrial estates at the border with Israel) remtyains stable, at around Figure 4 Real Wage Adjustment 1995-2001 2,000. The positive job creation in Gaza was however insufficient to reduce the unemployment level and rate, 30% 110 as the active population is naturally growing fast and A Xa. new job oppoltunities encourage people to participate 25% - / Unemploymentdrate 0 J - 105 on the labor market (hence increasing the pool of active _100 workers). 20% ---9 Using the ILO definition of unemployment, the unemployment rate went up from 22 to 26 percent in 15% - |.90 West Bank and 35 to 36 percent in Gaza from Q4-2001 - || to Q1-2002.5 In total, given the larger weight of the West .85 80 Using the 'rlelaixed definition" of unemployment, whichi includes 5% I I I I I I 75 discouraged workers shows similar trencs. In this case, the ineiiployment cn ci CON i cn ci 0 o rlte went tip fromil 35 percenit in Q4-2001 to 39 percent in QI-2()02. See a 0 a a a a a a previous issuies of West Bink zind Gaza Update for a discussion on these Source, Wnorld Batik staffcalculations based on PCBS. Data excludes ast two definitions of unemployment. fernsalen. A guslt 2002 LtAY-E.PM5 11 .+_ 10/3t102,1:09 PM *+_i rm I I As a result of extemal closures, some 90,000 Palestinian The low inflation rate in 2000-2001 (2.4 percent on workers liave lost their jobs in Israel since September average each year, see 7able 1) probably limited 2000. The implied decline in workers remittances in downward adjustments on real wages. But it is also likely 2001 (a 52 percent decline with respect to 2000, and a that the dis-integration (in its literal sense, i.e. 58 percent decline with respect to 1999 once accounted partitioning) of labor markets, due to internal closures, for changes in nominal wages) is very significant, and reduced their contestability and in tum the matching of has direct consequences on the income of l'alestinian labor demand and supply.6 As a result, most of the households, as workers remittances from Israel adjustment took place in the form of growing represented some 18 percent of their total disposable unemployment (as well as the increase in the numnber incomes in 1999. In turn, lower incomes inevitably of discouraged workers), which is more costly for the affected the demand for Palestinian goods and services, Palestinian society as a whole than a generalized and hence labor demand for Palestinian workers reduction in real wages, for its effects on aggregate producing such goods and services. purchasing power and poverty. Besides, the slow clecline However, it is difficult to believe that the decline in in real wages clid not enable exporters to gain market domestic jobs could have been caused solely by this shares through increased wage competitiveness, as (negative) multiplier effect. Some supply-side effects already discussed in the trade section. must have also played a role, as job losses in WBG exceed by far what could be expected from a simple a Pices. multiplier effect. Indeed, 65,000 net jobs were lost during the same time in West Bank and Gaza, or 75,000 jobs in Consumer price inflation picked up in both West Bank the Palestinian private sector once accounted for the and Gaza between December 2001 and May 2002. creation of 10,000 jobs in the P'alestinian Authority since During these five months, consumer prices grew by 2.0 September 2000 (see 7able 2). Moreover, this observation tercent in West Bank and 2.6 percent in Gaza. In annual does not account for the gigantic opportunity cost terms, it is equivalent to 4.8 percent in West Bank an represented by the sum of jobs which were not created 6.3 percent in Gaza, significantly above the annuall duresengthserio the suone ould jobstwhichmwerate d around70 inflation rates recorded in 2000 and 2001 (see 'able 1). during this peniod, that one could estimiate around 70,000 ThstogdpeiinofheSsncDcmbr20 under assumptions of constant labor participation and The strong depreciation of the NIS since December 2001 unemployment rates. (see Figure 5) explains to a large extent this acceleration of inflation: during the same period, the New Israeli Some of the negative effects of the crisis on the supply- side of the economy have already been documented: closures entail greater transaction costs (out of which transport cosLs are estimated by PCBS to have increased Figure 5. NIS/US$ Monthly Exchang Rate by 30 percent since September 2000 - see the section 5 1 on prices below), disruption in production cycles, lost 49 perishable output, lower economnies of scaile and 4.. 0 specialization; moreover, physical damages of 4.5 - infrastructure, land and factories reduce the productive 4.3 - capacity of the Palestinian economy. But closures, ancl 41 in particular internal closures, also most likely cdiminish 39 3.7 the Palestinian labor market capacity of adjustment to 3.5 the crisis. Contrary to what happened during the first a 8… N 8 wave of harsh external closures in 1995-96, real wages E t z -, M E', z E did not drastically decline after September 2000, in spite Sooinet Cettral Bank Of Israel. of a large and growing unemployment rate. The Figure 4 below clepicts clearly the opposite evolution of real wages and unemployment until Mid-2000. But as it can 6 Ptirting aside the impact of intemal closures, Palestinian labor- marl(ets be observed, the sudden and large increase in in West Baink anid Gaza are considered to be flexible. There is no official unemploymiient rate after Septem-iiber 2000 was only ii,iniiluil w\,rage in place, and labor market regulation is very luimited. There is no fonmal unemploymilent insurance systemii either, which could accompanied by a modest clecline in real wages. lower labor participation and/or- inicrease resernation waiges. August 2002 12 LAY-E.PM5 12 a1031102,1:09 PM Shekel lost 14.4 percent of its value with respect to the In Gaza, price levels staid more stable on overall, with US dollar. As a result, prices of imported goods the exception of transport (+10 percent since September mechanically increase, and, depending on substitution 2000), see Figure Z7 The later contributed for almnost 1/2 effects (between imports and domestically procluced in the overall CPI increase (+2 percent since September goods), the overall consumer price index increase. A 2000). Food prices looked rather cyclical, but did not higher inflation in Gaza might indicate a higher increase over dte period, suggesting that nor the West dependency (at least in the short run) on imported goods Bank neither Gaza did experience generalized foocl compared to the West Bank. shortages. Nonetheless, this recent evolution of prices significandy contrasts with the trends observed in West Bank and in Figure 7. Price Indicies, Gaza Gaza since tle outbreak. of the intifada in September 108B 2000 (with prices increasing much more rapidly in the West Bank than in Gaza). While the recent evolution can largely be attributed to the influence of the NIS 104 depreciation, which can in turm be considered as an 102- external shock (mostly reflecting the declining 100 confidence in tle Israeli economy), the longer term trends probably illustrate more accurately clomestic 98 constraints in the West Bank and in Gaza. 96 In the West Bank, consumer prices increased steadily 94 - +Food _Transpor -Overall CPI (+7 percent since September 2000, see Figure 6). This 92 principally as a result of transport costs increases (+40 o o o o o _ o o 0 0 0 0 0 0 0 0 percent), which contributed for 3/4 in the overall CPI r increase. On the other hand, the price of tradable goods - :E z n ( Un z E (food, textiles, manufactured goods, etc.) did not significandy increase over the period. This is consistent Source Wor/d Bank staff calculations based onr I'CBS. Irice incice, arc with dte hypothesis tlat the price of imported goods 3-moot.b mnovitig averages. increased compared to the price of domestic goods (which are pulled down by the downward pressure The fact that transport costs increased imiore rapidly in exerted on wages). West Bank reflects tighter intemal closures than in Gaza. But the higher inflation rate in West Bank compared to Gaza since September 2000 also probably means that domestic supply (out of which transport services is an Figure 6. Price Indicies, West Bank important input) and imports were put under stronger 140 constraint in West Bank. In Gaza, by contrast, demand 135 was probably more affected than supply, which in turn -4-Food -5Transport --Overall CPI exerted a downward pressure on prices. 130 125 120 115- 110 -! 105 100. 95 o 000 000 000 0 < 6 E n <#> z X ;>'() 6 Souirce. l']oHd Bank staff calculations based onI PCBS. Daita exclucdes East .Jersalemn. Price inidices arv 3-monrb moving averages Aukgust 2002 13 LAY-E.PM5 13 1013/102, 1:10 PM D Department of International structures and substandard or Bank Group Development (DI-7D) - British undersized classrooms at 24 Contribution: US$2.2 million grant. elementary schools, and replace or Operations Effectiveness date: January 5, 2002. repair broken furniture; (b) construct Expected closing date: October 31, and furnish new schools in A . Multi-DoIr IfU1d 2003. The estimated total direct underprivileged areas; and (c) upgacle, Administration employmilent is 35,000 person-day-s expand, replace and fumish 10 plimaty At-Intinistration ~(18,000 in the West Bank and 17,000 hiealth care facilities. 9 Palestinian Economic in Gaza). 63% of the funds have been 2. Improve Quality of Services. This Assistance and Cooperation committed (to some 19 sub-projects, component aimed to: (a) initiate a Expansion (PEACE) Facility. The and 10% have beeni disbursed One quality improvement programil in PEACE Facility, a multi-donor project has been completed. To date primary and secondary services successor to the Holst Fund, was set 2,147 person-clays lhas been generated. through technical assistance anc up in response to the need expressecl training; and (b) support health by a number of Donors for ab l Islamic Development Bank (IDBE education program for schools. multilateral or umbrella facility to US$7 million grant. Effectiveness date: support targeted activities ranging from July 3, 2002. E-xpected closing date: 3 Develop Institutional Capacity. This technical assistance to projects. June 30, 2003. The estimated total component aimed to: (a) provide Objective The broad objective of the cdirect employment is 160-170,000 technical assistance to clevelop a five- IIEACE Facility projects is to help person-days. PECDAR and the Welfare year plan for the health sector; (b) relieve the economic and social Association Coinsoltiuim (WAC) have conduct a feasibility stucly on hardship caused by the current crisis mobilized to implement the project. conundGcazion health facilities to in WBG and the resultant Israeli border enand the halth famedical closures. The cunent P'EACE donors * Italian Cooperation Contribution: expertise and enhance referrdal have focused on prolects designed to Eulo 10 imiillion grant. Expected system; and (c) provide technical create short-term emiiployment Effectiveniess (late: September 2002. assistance and training and opei-ational opportunities for those most affected Expected closing clate: September support to the Project Coorclination by the ongoing political crisis. 2004. The estimated total direct Units (PCUs). employment is 240,000 person-days Latest developments: The World (126,000 in the West Bank and 114,000 Bank comiiponent has been closed and-c- + Project Progress: in Gaza). The project is now fully the Implementation Completion Repoil C Canadian International Develop- prepared and the granit agreement is (ICI) has been completed. Uncler the ment Agency (CIDA) - Canadian expectecl to be signed by the Saucli Grant thirteen schools have Conmtibution: US$3.25 million grait. Palestinian Autlolity in the near future. been built and fully furnislhecl; four Effectiveness clate: November 14, 2001. Expected closing clate: March 31, 2003. clnics, two hospitals (in Dier Elbalanl The estimated total direct employmiient B. Investment Projects Gaza, and in Yatta, West Bank andl is 80,000 person-days (42,000 in the As ofJuly 2002, the Worcl Bank Group Nheblenshaveonoeen buafuidiallyofrnishecl West Bank and 38,000 in Gaza). 97.5% lias 21 projects under imiiplementation, and equipsabent installed. The Ministey of the funds have been committed to six completed projects, and three fnH eIpmet D int baild.nh is incisr some 40 sub-projects, and (61% as projects under preparation. construction and is progressing well. been. Nineteen su-ib-projects lhave been Under the Italian Grants, eleven completed, and to clate, 45,147 person- Ongoing World Bank Projects schools and five community centers for days have been generated. the handicapped have been built ancl i Education and Health fully furnished. Construction of one * Danish International Development Rehabilitation Project (EHRP). school and one community center for Assistance cDANIDA) - Government of World Bank: US$20 m. the handicappecl is progressing well. Denmark Contribution: US$3.5 million Saudi Arabia: US$20 in. Equipment, teaching and leaming aids grant. Effectiveness clate: November Italy: US$8.65 mn. have been supplied to the schiools and 25, 2001. Expected closing date: Australia: US$0.4 in. to the community centers for the December 31, 2002. The estimateci total Approval date: July 9, 1995. handicapped. Under the Australian clirect employmilenit is 70-80, 000 Worcl Bank closing date:June 30, 2001. Grant, strengtheningof policy-making, person-days. 86.4% of the funds have Saudi ancl Italian closing date: planning, and research capacity within been committed to some 30 sub- December 31, 2002. the Ministry of Education, projects in the middle area of Gaza, Desciption: The project consisted- establishment of a school mapping andl 52% of the funds have been of the following components: database, and a maintenance disbursed. Ten projects have been 1. Upgrade Physicien Infrastructure. scheduling system for the Ministry have completed. To date, 34,145 person- This component aimed to: (a) all been completed. days have been generated. reliabilitate facilities, replace dangerous August 2002 14 LAY-E.PM5 14 + 10/31102. 1:10PM 0 Education Action Project. the management capacity of the the Ministry of Public Works (MoPW) World Bank: US$7 m. Ministry of Health (MOH) ancd improve the Palestinian Water Authority (PWA) Borrower(P'A): US$0.63 m. access to high-cluality and affordable and l'ECDAR. The focus is on initiating Approval Date: July 18, 2001 Primary Health Care (PHC) services, institutional reform ancl capacity Closing Date: September 30, 2004 especially in rural and underserved building at the local government level. Description: The Education Action areas. The Project has four The Capacity Building Component Project (EAP) aims to support the comiponents. The first supports the which involved MLG and five selected implementation of the Ministry of upgrading of the primary health care addressed issues related to cleveloping Eclucation's (MOE) Five-Year network through replacing 40 the municipal planning and financial Development Plan. The objective of substandard PHC facilities, including management structures, primarily 3- the project is to improve the e1ltiipinent andi furniture and year investment plans, a Financial management capacity of the education developing their functional standards. Management Information System system to deliver quality services in a The seconcd componentsupports the (FMIS) and a Refonlned Management fiscally feasible manner. The project establishment of a Healtil Management Information System (IMIS). hIas two complementary components: Information System whiereas the third LatestDkvelopments Realocation Of The first directly supports strengthening comiponent will imiprove tie quality remaining funds: To respond to the the management capacity of the Ministiy ancd efficiency of care. The fourth need for iiing ediate assistance to rtepai of Education (MOE) for policy, planning comiiponent provides support to the daimage incurred by the recent and budgeting across departmients. The Plroject Imiplemientation Unit for Project incursions, the Bank has reallocated second supports specific investments in Coorclination andc Management. US$2 million (5% of Bank financing) targeted programs in line with the Latest Developments: Due to the of the remaining balance originally objectives of the MOE's Five-Year Plan, cuiTent political situation, some of the designated to Capacity Building for including a program for school project components have been facing labor-intentive damage repair. The improvement through staff review anct serious dlelays, especially in the West funds will be distributed among not school development program, and the Bank: The five primary health care only the participating municipalities in clevelopment of professional standards centers in Gaza are functioning, this program but also amonig other for headteachers, and support to wheleas the constiLiction of the nine communities in need for assistance. Vocational Education. PHC centers for the first phase in the Latest Developments: Despite the West Bank have been delayed; as is sTuhe hysicl compoletednent hasost bll obstacles imposed by the political unrest also the case for the construction of available funding comwitted to sotae and emergency situation in WBG, the the Health Information Center in aib funding c-omiedto some 300 physical sub-projects, includ(ing Project has made substantial progress Nablus. 210 micro-projects. So far, more than on most of its components since credit Despite thiis, the project hlas managed 220 km of roads and 100 km of water effectiveness on November 21, 2001. A to develop a mianageinent.informiation and sewage pipelines have been Project Launchi Workshop was held on system for tie Treatment Abroad and constructed. Also, upgrading of thiee May 13, 2002. In adclition, work has Referal Departimient andl the Health neighborhood areas in Gaza City have alreacly started on the following Insui-ance Department, ancd to prepare been completed. activities: constiuction of atwo-floor the first version of the 'alestinian Data extension to tie existing MOE building Dictionary in addition to the first The Capaciry Building Component has in Ramallal, preparation of a Finaiicial version of the Clinic Information bee .sevrl delayed astareltyo Managemilent Manual and the Systemil. Also, of the first version of accompanying taining, selected training the Palestinian Essential Drug List and To date, only Hebron, Gaza and Rafah for teachers and supervisors, Formularies has been printed ancd municipalities have successfully preparation of materials for training distributed. completed their three-year investment modules for teachers and supervisors, plans. Nablus andJenin Municipalities idlentification of four sites to build [ Municipal Infrastructure have completed the diagnostic studies vocabonal education units. Procuinent Development Project (MIDPI)r but have been unable to continue the of etioipment aincl furnitPure ant d o IMDP) tendering process for the three-year curriculumlevelopnent fornvocationl World Bank : US$40 m. investment plans. A Revenue education is underwvly. Greece: US$1.74 m. Management Information System for Italy: EURO 3.67 rn. WBG Municipalities has been awarded Approval date: June 12, 1996. and implemented in many of the C Health System Development Closing clate: December 31, 2002. participating municipalities. A Project (HSDP' Description: This P'roject aims at Geographic Infomiation System (GIS) Worlcl Bank : US$7.9 m. rehabilitating high priority municipal has been implementation in Gaza Borrower(PA): 850,000 infrastructure networks and systems in Municipality, but Hebron and Nablus Approval Date: December 9, 1999 WBG thiough working clirectly with Municipality's bidding were delayecd by Closing Date: April 30, 2003 five selected municipalities (Gaza, the incursions. A state-of-the-art Description: The development Nablus, Hebron, Rafah andJenin), the computeranci network center has been objectives of the Project are to enhance Ministry of LIocal Government (MLG), completed in Gaza, Jenin, Nablus ancI Auqgust 2002 15 LAY-E.PM5 15 10131102. 1:10 PM l + - A Rafah. An electricity stucly was Latest Developments: Considering & Alami (LEKA)] uncder a four-year completed for the Hebron Municipality the current sociopolitical constraints, management contract to implement a but was stopped in Nablus clue to the JSC-PIU has focused on closing Service Improvement Program; (h) the inability to complete the procurement uncontrolled dumpsites and provision of operating investment of this item. rehabilitating others in order to extend funds for the Operator built into the their operational life till the delayed Management Contract, essential to funcl O Second Municipal Inifra- new regional landfill proposed at goods, equipment, works and seivices structure Project (MIDP 11). Zahiat Al-Fanjan is operational. To - required for improving services and the ldate,. three dcumpsites (Faquaa, attainment of perfonnance targets; and World Bank: US$7.5 m. Qabatyia, Seilt Al Harthya) have been (c) the provision of technical assistance (Italy is currently conside.ing closecl and four dumpsites (Jenin, to strengthen the PWA, to support Srouj, Al Mahata and Arabeh) are being imiiplementation and monitoring of the contiibuting a suimii of US$5.7rm of' rehabilitatecl to act as regional Project, and to provicle indepencdent Which US$2.5m wil be for roadis andl controllecl clumpsites cluring the auditors to monitor the Operator's US$3.2m for water)]. interim periocd. Access roads to these technical and financial performalice. Approval date: June 20, 2000. sites are also being rehabilitated. In The implementing agency is the IlWA. Closing cdate: December 31, 2004. adldition, theJSC has also been actively Latest Developments: Some of the Description: The main objective of involvedl in cleaning up of accumulated main achievements after four years of IvIlDP 11 is to improve infrastructure wastes cduring the recent closures ancl implementation of the Project, as seivices (roads, water, and drainage), inilitaiy incursions. Furthennore, the audited by an independent auditor alre: including high priority sections of the JSC-IPIU has moved forward in over 1,200 km of pipe have been regional roacl network ancl preparing for the proposed surveyed for leaks ancd over 16,000 rehabilitation of village and imiunicipal construction of the Zahrat Al Fanjan illegal connections identified; over water networks in WBG. The Ministry landfill. Six qualified intemational finns 22,000 service connections have been of Public Works, Ministry of Local wereshort-listed and have been invited replaced, over 20,000 meters of pipe Govemment, and the Palestinian Water to submit proposals for the cletailed has been repaired, and a total of over Authority are the implementing design of the landfill. BothJSC-PIU and 30,000 meters replaced. Recent agencies for this Project. the Environmental Agency recognize miieasures of Unaccounted-For-Water The Project will also provide support the imiiportance of ptiblic awareness (UFW) are around 300/o, while reliable to the Ministry of Public Works to campaigns and are gearing themselves disinfection is maintained at 98%. The establish its first Road Maintenance to solicit proposals fronm NGOs and existing Management Contract has Management System. In addition, the local consulting firms to carry out this been extendedl through December project will continue to provide important task. 2002. The Credit is fully committed support to the Ministry of Local Most recently, the European Union has and disbursements as of August, 2002 Government for an accounting system approved the financing of components stand at US$29.9 million. and instititional reformi. The scope of related to solid waste management, capacity building in the six including purchase of equipment o Soutbern Area Water and municipalities in WBG will be reduced neecled for primnary and seconclary Sanitation Improvement Project and funds reallocatied to damage collection of solicd waste including (SAWIPJ repairs. support for operations and maintenance. The JSC, in cooperation WIrld Bank:US$21 m. O Solid Waste and Environmental with MLG, have completed the work- A r d j 5, 1999 Management Project (SWEMP). plan recluired for this component. The Closing date: June 30, 2003. World Bank: US$9.5 nm EU consultant working with the JSC- US$1.25 miiillion is anticipated froimi PIU hsas also completed a neecls Desctiption: The Project consists of: the PA. assessmienit andc prepared tencder (a) the provision of an internationial Approval (late: October 10,, 2000. dlocuments for the supply of Operator [General des Eaux, Khatib & Closing dlate: Decemiber 31, 2005. ecluipmient. its envisionecl that the Alamii (GEKA)I under a four-year Description: The Project is financing tender-ing pr-ocess will commience performiance based Managemient interventions in solid waste collection, shortly. Contract to inmpgleient a Service transfer, and disposal of waste for Improvement Program for the the District of Jenin. The project is 0 Gaza Water and Sanitation Governorates of Bethlehem and managecl by the Joint Services Council Services Project (GWSSP I. provision of operating investment for Solicl Waste Management (JSU) ancl Worlcl Bank: US$31 m. funds for the Operator built into the is being executed through a lProject Approval date: July 5, 1996 Management Contract, to finance Implementation Unit CJSC-IPIU). The Closing date: December 31, 2002 essential operations and maintenance project is assisting the strengthiening Descriptio The Project consists of: expenditures not covered by the of the capacity of the Environmental (a) the provision of an intemational revenues collected and which are Quality Authority. Operator ILyonnaise cles Eaux, Khatib required to achieve the yearly August 2002 16 LAY-E.PM5 16 _+ 1013t102, 1:10PM performance targets in the [ Legal Development Project Latest Developments: Recruitment Management Contract; (c) the (LDP). will be restarted for new priority provision of funds (by EIB) to finance World Bank :US$5.5 m. positions to be identified in the design, implementation, and Saudi Ar.abia: US$12 m. Ministries of Economy and 1racle, supervision of capital improvements, Approval date: June 24 1997. Education, Finance, Health and Higher such as, system rehabilitation aincd Closing dlate: December 31, 2003. Education. The current crisis is bulk transmission mpains distribution sDescription: The Project aims to seriously affecting the ability of cunent bulktrasinssio mans;distibuion initiate a long-termi process of assisting participants in the Plrogramii to continiue systems restructuring and gh At iioenz gn iriinz their work effectively, but they have rehabilitation; as well as an investment the IA to mllodernze and hvarmonize shown extraordinary fortitude and in rural water supply; and (cl) the lexistig legislatio, atdoegiuve toriseppon couragetokeepworkingaespitetese provision of technical assistance to la frame rk equate to difficulties. support strengthening the institutional a modern tmarket economy, and to capacity oPWanWSAtospo sector. it also supports the training of E3 Palestinian NGO Project implementation anc monitoring of the e o coup tt e in of Project and provide indepencdent jtdges ancd court personnel in order (PNW O ) auditors to monitor the Operator's to increase the efficiency and World Bank US$1 in. technical ancd financial performance. trnsparency of the judicial process. Saudi US$2.5 In The implementing agency is the PWA. Latest Development: In December Italy: US$2.5 m. Latest Developments: An 2001, US$2.7 miaillion of the credit Approval date: December 1996. indepndentauditof th Opertor's amiount was cancelled due to slow Closing date: June 2003. FindetpeYndent Paudit of the inicatoeds implementationi of certain project Description: The Project is aimed at satisfactory performiance. P3roject com'iponents. Thie United Kingdomii has delivering services to the poor anc the implementation continues to be providecl valuable financing for marginalizecd in the Palestinian society satisfactoiybut has slowed down since legLslatve cdirafting As part of tlhe overall through NGOs; i m proving the September 2000 as a result of the program of legal development in WBG, institutional capacity of the NGOs cleteriorating political situation. conistiLiction of two courthouses is which receivegrants undertilis project; Disbursements, as of August 2002 are planmed-(one eachi in the West Bank and enhance the working relationslhip approximately US$9.1 million, ancd in Gaza), to be funded by the betweenthePalestinianAuthority((PA) representing about 43% of the Creclit. Kingdom of Satidi Arabia. In this regard, and the Palestinian NGO sector. T he the shordist of Consulting Engineering Project had Two Main Grant-Awarding Fimis was established, the Request for Schemes: The Development Grants n The Second Community Proposals to produce the design and Program and the Block Grants Development Project (CDP II). bidding documents was issued to these Program. The project is being World Bank: US$8 m. firms, incoming proposals were implemented by the Welfare OPEC Fund:US$8 ni. evaluated and negotiations with the top Association Consortium, consisting of Approval date: March 30, 1999. rankecl fini were concluded. The Bank the Welfare Association, the Britisi Closing date: October 31 2002 is awaiting the transfer of funds from Council and the Charities Aicl Over 180 infrastructure projects SUCh the donor to clear contract awarcl. Foundation (CAF). as rehabilitation of roacis, schools, Latest Development: The Plroject is healti centers, water supply systems LI Palestinian Expatriate nearing completion, having dlisbursed have been committed, of whlich 160 Professional Program (PEPP). a total of 94% of the total US$ 11.241 have been comiipletecl. The Worldl Woricl Bank: US$3 m that was made available for financinig Bank funds have been fully disbursed. Projefucts have taretenflydipoorsand Nether-land: US$0.3 rn both grant schemes. As of July 2002, marojects liave targeted poor anci Approval ldate: May 22, 1998 out of the 111 projects funded from refarginalized communities, inclising Closing date: June 30, 2003. the Development Grant funds of US$ irefugee camips. Tle CUITent crisis h.as778milo,8haebncmptd impacted the implementation of CI)P Description: The PEPP supports the 7788 million, 88 have been comp eted 11 through delays and difficultes witlhin recruiunent of expatriate Palestinians Of tontgal thfuncisburselamlent ate 92s%$ communities to contribute to project to key management and senior 2,950.38 million allocated to Block costs. Nevertheless, the project has teclhnical positions in PA institutions Grants, a total of 195 sub-projects have continued to make progress ancd has as an institution-building measure. been funded andl coI leted. provide much neededl work in villages Since the Programil startec in late 1997, p and small municipalities. On the 17 persons have been successfully Impact Assessment: The PMO had cofinancing side, wlhile OPEC funded recruitecd for positions at 11 IPA completed thefieldworkfor ssessing activities are continuing, the EIB Miinistries and Agencies, including: the the impact of both Block and contribution has been suspencdedl after Mlinistries of Finance, Health, Higher Development Grant Schemes. The disbursement of about three million Education, Housing, the Palestine results of the field work will serve as a euros. Broacdcasting Corporation, the Palestine basis for a fonnal assessment of the Implemeting Aency: ECDAR. Monetary Authiority, andi the Bethflehem imipact of the project on the Imiiplem-nenting Agency: PECDAR. 2000 Comiimittee. benieficiaries. The Impact Assessment Aiugust 2002 17 LAY-E.PM5 17 + 10/3/102, 110PM report will be made public once it project proposals. The review of Rehabilitation Works: This component becomes available. proposals is expectecl to be completed supports physical rehabilitation works for awarcling grants by September and includes two sub-components: A) El Palestinian NGO Project 2002. Infrastructure Rehabilitation Works: (PNGO II) 2. Development Grants: The pre- This sub-component provided suppolt World Bank US$8 selection of qualifying NGOs has been to the Bethlehem 2000 Project KDFID Bank:US$7-8 m. completecl ancd those short-listed will Authority and Area Municipalities for U/lDFID: US$7.8 m. be invited to submit proposals for the rehabilitation of high-priority Itapprov date:4 June 21,, 2001funding by the end of August, 2002. infrastructure ancd services, namely Approval clate: June 21,, 2001 ' roads, water and sanitation; and B) Closing date: February 15, 2004. 3. Sector Support: Consultants have Support for Cultural Heritage Description: The Project is aimed at been comissioned to develop the Rehabilitation Works: This sub- strengthening the capacity of NGOs to clesigof the mentioned sub component provides support to the cleliver sustainable services to the poor components. Bethlehem 2000 Project Authority, Area ancd marginalized, while supporting the 4. Emergency Grants: A total of US$ Municipalities and Department of overall professional ancl strategic 1.8 million has been approved for Antiquities for the rehabilitation of the clevelopment of the Palestinian NGO funcling 32 projects in the West Bank historic cores of Beit Sahour ancd Beit Sector. The project is being ancd Gaza. Jala. implemented by the Welfare AdditionalEmetgency Grants (US$ 1.1 3. Capacity Buildinig Support: This Association Consortium, consistinig of millionfrom lDB, USS 0.6million from component provides capacity building the Welfare Association, the British CIDA; and US$ 1.5 million from the support to Area Municipalities ancd Council ancl the Charities Aicl Italian Governmneno: In addition to its Cultural Heritage Authorities. It Foundation (CAF). role as Implementing Agency for the includes two sub-components: A) The Projecthas fourmain components: INGO 1/11 projects, WAC hias lDeen Support to Bethlehem Area 1. The Partnership Grants Program asked to imilplement donor-financed Municipalities. This sub-component (US$ 9.5 in.) whichi awards grants to emeigency grants for job-creation provides support to the five Bethlehemil "groups" of NGOs consisting of strong projects dirough NGOs. As of now, the Area Municipalities for strengthening "lead" NGOs and smaller NGOs who, PMO is mianaging a total of US$ 1.7 their capacity to plan, finance, manage in partnership, will implement sub- million of sucli grants from the IDB and maintain municipal infrastructure pr-ojects that are, inter-linked by a and Canacian CIDA while preparing and services; and B) Support Cultural comiimon objective, with a strong for the im)plementation of a sillilar Heritage Preservation: This sub- cCooiniipmoonennt ioJf calpacity Ibuflcalinsg andg program usinig funcis fromiz the Italian component provides support to the netwompking. Govermrnent. Department of Antiquities in the 2. The Development Grtkts Progrwiorg RePortingonPPhysicalandInstitutional Ministiy of Tourisni and to the Ministry (US$ 2.5 e.) wlich awards gramts to Damage to the NGO Sector In of Culture for policy and institution NGOs 2. . rojec as t gat t otav partnership widt the Canadian CIDA reform and development. NGiostorae projects thatn haveO ancd Palestinian NGO networks, the Latest Development: 2. Infrca- ndemonstrated a successduing ofG logr Welfare Association Conisor-tium has structure Progresv. (1) Roads:' the andwhich have a potential of Ionger- proclucedl a report on the institutional planned IDA components are i0'Y term self-sustainability. and physical clamage inflicted on complete. The Artas Road co-financed 3. The Sector Support Program (US$ NGOs as a result of the March/April with Italy is complete. The Shepherds 1.5 in.) works with NGO networks to incursions into West Bank cities. Total Fields RZoad, co-financed by Norway, I) promote strategic thinking on the clamage has been estimated at US$ 4.5 including landscaping works, is role of the sector; ii) sector leaming million. complete. (2) The water: components and information exchange; iii) are 100% complete; (3) Cultural enhanced PA/NGO dialogue ancl joint t] Bethlehem 2000 Project Heritage three of the four sub-projects programming; and, iv) improvecd cB2000) are complete. The fourth one, co- services by the Networks to their f.nd by Austria, is u constituencies. World Bank: US$25 m. inanedb Asr,iu e 4. ii iiergncyGnnts13rgim (S$ Norway: US$1 in. implemientation. 4. AnI Emergency Grants rogram (US$ Italy: US$2.26 I. 3. Municipal Capacity Building: The 2.5 i.) which disburses granlts to Austria: US$0.73 m. Request for lProposals for the edergency proJeCtS with soirter Approval (late: November 2, 1998. development of a three-year alleviating hardship and generatig fClosing clate: June 30, 2003. investment plan was issueci to alleviating haridshlip ancl generating employment. Description: The project is composed shortlis ted consulting firmhs. f th folowng ciiionets:Discussions to activate other Latest Developments 1. Partnership of the following components: components are ongoing with MLG Grants: Seven Partnership Grant 1. Celebration Support: TleBet-Jelie andthe Bethlehe AreaMunicipalities Managers (NGOs) were pre-qualified 2000 Project Authority has successfully for this program ancl have received staged the 1999 christmas celebrations. Technical Assistance for dleveloping full 2. Infrastructure and Cultural August 2002 18 LAY-E.PM5 18 10131102, 1:10 PM I IIE I+ 0 Electric Sector Investment and commitments stand at 53.6 anci included the Ministry of Local Management Project (ESIMP). clisbursements at 29 % It is anticipateci Govemment (MLG), Local Govemment Worldc Bank: US$15 m. that clisbursement level would come Units (LGUs) and NGOs, ancl PECDAR. Approval date: August 31, 1999. up to 50% by the end of September An Implementation Completion Report Closing date: June 30, 2004. 2002. However, daily curfews and has been completed. Description: The objectives of this continuous closuLres, particularly in the The Project was successful in achievinig US$91 m-lUion Project are to rehabilitate West Bank, do pose a great threat on its objectives. More than 246,000 the power distribution systems in the the progress and has caused clelays in person-clays of employment were central and southern West Bank, and a nulmiber of plannecl activities, generated over a period of eight to address the institutional structure for months. The average labor content of longer-term sector management. O The Integrated Community the Project was about 28%. Latest Development: Despite the Development Project (ICDP). A total of 209 sub-projects were present unrest, the implementation of World Bank: US$10 million. implemented. This includecd the the main activities (JDECo and PFA Approval clate: May 23, 2002. rehabilitation of about 69 kilometers comrponents) is progressing Closing date: June 30, 2006 of the road network, 18 kilometers of satisfactorily. Effectiveness conditions The Project seeks to improve the fences, and 2 kilometers of retaining have been completed for the HEPCo quLality and availability of basic social walls. In addition, about 52,000 square and SELCo components and work has ancI economic services in poor and meters of sidewalks were constructed. already started. marginalized communities of West About 62 kilometers of pipes were laid A supervision mission will take place Bank ancl Gaza. This new Project is a for the water and sanitation systems. in September 2002 in particular to continuation of community In addition, 204 classrooms were in September 2002 in parti r t clevelopment inteiventions finanicecl constructecl. About 160 commiiunity follow-up on the start-up of SELCo and HEPCo Companies. About US$8.5 tlhrough the World Bank under rooms were constructed, some of million of the US$15 million has been Commiiiiunity Development Projects I which will be used as clinics. Local disbursedn tof dte. U15niiohaben and IIL Investmients will finance NGOs implemiented a total of 33 sub- clisbursed to date. rehabilitation of roads, water supply projects. and sanitation systems, schools, clinics, O Emergency Services Support and thereby preserve and extend the O Emergency Rehabilitation Project (ESSP). capital stock of villages and small Project (ERP I). Worlcl Bank: US$20 m. municipalities. The Project will also World Bank: US$30 m. UK/DFID: US$7.8 m. funcl interventions in the Agricultural Saudi Arabia, Denmark, Switzerlanc, Netherlands: US$5.9 in. Sector, including rehabditation 6f wells, Kuwair: US$63.5 m. EU: US$9.6 in. roads, andl ter-aces. Lastly, the Project Kuwait: US$63.5 m. Pledged funding from Sweden, wouldl pilot new initiatives in Approva date: November 29, 1994 Denmark and Finlancd estimated at US$ Information and Communication Closndt Decemer 31 1998. 7 million. ~~~~Technology (ICT) by financing the The Project (implemlented byPECDAlR) 7 miillion, fehooy(C)b iacn h inanced a total of 140 infi-astruLctur-e Approval date: February 28, 2002. establishment of NMulti-purpose pirojects, including construction of 418 Closing date: June 30, 2004. Telecenters ancl thereby improving classrooms, paving of 260 km of ioads, Description: The Project aims at access to infonmation and ti-aining for and construction of approximately 410 enabling Social Service Delivery the poor andi miarginalizecl. The project kmi of water supply pipelines, 80 kmi Ministries and Municipalities at launclh is awaiting the signature of of sewer lines and stonm water lines sustaining the provision of basic social Creclit Agreemllent by the P'alestinian and five water reservoirs. services, thereby ameliorating further Ministry of Finance. deterioration in the standard of living 0 Second Emergency Re- of the Palestinian Population. The babilitation Project (ERP II). Project focuses on supporting health, Completed World Bank Projects Worldtank: US$20 in. eclucation, social welfare, and basic World Bank: US$20 m. municipal services (solid waste, water 0 Emergency Response Program Italy: US$3.7 m. ancl electricity supply). With its focus (ESRP). Approval date: May 10 1997. on providing operating cost finance, World Bank: US$11.61 million Closing date: June 30, 1999. this Project complinments the financing Effective date: December 6, 2000. All available funcling has been of the national budget that is provicded Closing dlate: August 31, 2001. conmmitted to 77. All 77 sub-projects to the PA by the Gulf countries and The overall objective of the EIRP was in the road, water, waste water, and the European Conmmission (EU). The to alleviate economic lardship throtuglh sclhool sectors (including 42 labor- Ministry of Finance manages the ESSP, the provision of temiipolary intensive micro projects)have been with direct implementation lanclled by employmiient for unskilled and semi- completed. The Project was the Ministries of Health, Education, skillecl laborers. Local suppliers and implemented through PECDAR in Social Affairs and Local Government. conti-actors also benefited through tle coordination with the WBG Latest Developments: To-clate, increased demandl for materials and municipalities. Approximately 123 km works. The implementing agencies of roads and about 110 km of water Aungist 2002 19 LAY-E.PM5 19 1013/102,1:10 PM ancd sewage pipelines have been Palestinian Authority ; (c) assist the plants. These investments, totaling constructedl. An Implementation Palestinian Authority in the design of about US$340 million for 2000-2005, Completion Report for the Project has integrated policies and programs; (d) will be financed by soft loans and been completed. assess the feasibility of proposed grants from EIB, USAID, and KFW. physical investments for the longer a Community Development tern and (e) encourage the growth * Second Health System Project (COPPI). of the private sector. Development Project (HSDPII). World Bank: US$10 m About 15 Design or Supervision World Bank: US$ 8 million. OPEC Funcl: US$10 m Assignments and 64 and Technical Expected Board Approval CIDA (Canadian Grant): US$2.7 m. Assistance Assignments or -Studies Date: April 2003 Approval date: May 15, 1997 including a large number of trainng The Project objectives are to improve Closing clate: December 31,1999. activities were completed. A total of the quality, access, ancd cost- About 260 infrastructure microprojects US$23.6mnillion were disbursed to the effectiveness of essential seconclary (roacs, schools, community centers, PA inistitutions. The project completion and tertiary care health services for the sewer lines and water rese-rvoirs) were report is expectedl to be sent to all 12 population residing in northemn Gaza implemented. There was strong clonors shortly. and northern West Bank regions. In community participation andl the original plan, the Project intendeC ownership including beneficiary to replace and upgrade two hospital contributions in cash averaging 10% World Bank Projects Under systems: Al Shifa Hospital in Gaza and of the project costs. The project was Preparation Al Watani Hospital in Nablus, in implemiientecd by PECDAR. addition to build upon the experience Q Gaza Water and Sanitation of the First Health System Development Services Project (GWSSP II). Project to extend the development of Worldl Bank: US$25m. integrated information ancl Closed Multi-Donor Fund This Project is a follow-up to the management systems to improve the Administration ongoing GWSSP. The clevelopment productivity and quality of health care a HoistFund. Theimulti-donorHolst objectives of this project are: (a) to services in the targeted hospitals. US$291 in. from 27 clonors develop a sustainable institutional Due to the current political situation, Approval date: July 29, 1994 structure of the water and wastewater the preparation work for the Second Closing date: August 31, 2001 sector in Gaza by supporting the Health System Development Plroject closed after seven years of operation. funictionial establishment of a Coastal (HSDP) has been clelayed by more than US$222.5million was used to finance Municipalities Water Utility (CMWU) 1-1/2 years clue to the inability of the the creation ancd operation of under the ownership of the local preparationmissionstovisittheproject I'alestinian institutions - narrmely, the governments representing those sites. In addition, the amount of Ministries of Health ancd Eclucation. communities, as well as by enhancing financing avaidable both from the Bank About US$63.2 million was allocated ancd deepening the involvemiient of the and from co-financing sources have towards funding Employment private sector through a competitively been significantly reduced as a result Generation Programiis, targeting areas bid operating contract, ancl of the crisis. Consequently, the scope which were severely affectec by border strengtlhening the regulatory and of the project has been considerably closures and the current sociopolitical institutional capacity of the Palestinian reduced. The following components crisis. The Holst Funcl financed over Water Autlority (PWA); and (b) to from the original plan will be retained 1000 labor intensive microprojects and continue imiiproving the water and in the revised plan for tlhe secolnd it is estimated that over three million sanitation services by' rehabilitation, HSDP: a) a regional Hospital labor days of employment were upgi-ading and expansion of existing Rationalization Plan for the Northern generated. The project completion systems ancd facilities. Project West Bank, b) hospital master plans report is expected to be sent to all 27 prepar ation has been delayed because for Shifa Hospital in Gaza City ancd New clonors shortly. of the cleteriorating political situation. Watani Hospital in Nablus, c) a waste The reqluest for pre-qlualification for management pilot program; cl) T Technical Assistance Trust Iprospective international Operators lias management information systemn; and FundTAT As c b heen completed and four Operators/ e) quality inprovement. Fund (TATE.J. joint ventures were pre-qualified. Like US$22.97 million grant firo 12 donors the GWSSP, this Project is part of a Approval clate: March 31, 1994. larger parallel capital program to Closing date: December 31, 2001. imllprove water and sanitation services World Bank and IFCjoint Projects The objectives of the TATF were to: in Gaza. The Project inclucles a Housing Project (a) assist in building Palestinian substantial investments in the World Barik: US$25 in. institutions and to enhance the establislhmenit of a bulk water supply IFC: Up to US$4 miilion in equity IPalestinian capacity for self- network connecting the various investnent government; (b) facilitate the municipalities in Gaza, in the sewerage Approval date: April 14, 1998. implementation of investments in the network, ancl in wastewater treatment August 2002 20 LAY-E.PM5 20 10/31102. 1:10PM Closing date: March 2004. The largest component of this P'roject supported the creation and initial Disbursementrs Uuter World Bank Projects (In USS Milon) - As ofjune 2002. operations of the I'alestine Mortgage Currenc Allocated Amounts Disbursed Totli ancl Housing Corporation (PMHC) Projects TFGWB _Joint TFGWB Joint Disbursed which was designed to facilitate the EHlcP 20.00 29.10 20.00 20.27 40.27 flow of private capital into the Housing EHIU' 20.00 29.10 20.00 23.26 43.26 Sector in WBG. IVIIHC commenced MIDI) 40:00 5.41 36.84 4.01 40.85 operations in September 2000 and has Gaza 31.00 29.13 29.13 accumulated a modest portfolio over Water/San. I the past year and a half. Although the Microent. 5.00 2,35 2.35 present situation has significantly Mit. 5.00 2.63 2.63 slowecl down PMHC's operations, both Housing 25.00 affiliates, the Liquidity Facility (LF), Legal 2.79 15.00 2.32 2.32 providing long-term funcis for lending I'EPI' 3.00 0.32 1.46 0.32 1.78 by banks and other primai y moltgage NGO 10.00 4.60 10.00 4.80 14.80 lenclers in WBG, and the Mortgage GIE 10.00 4.38 4.38 Insurance Fund (MIF), provicling partial Betlh. 2000 25.00 3.61 22.77 2.76 25.53 risk coverage for primary lenders, CDP II 8.00 8.00 8.00 continue to build and increase their SAWSII' 21.00 8.32 8.32 respective portfolios. Canada Morlgage I.SIMI 15.00 8.44 8.44 and Housing Corporation (CMHC) is Health 7.9(0 3.19 3.19 the technical partner for the PMHC anci MIDP 11 7.50 5.00 1.18 1.18 continues to provide PMHC with Solid Waste 9.50 1.42 1.42 technical assistance and capacity EA s 7.00 0.30 0.30 building support. EA1' 7.()0 0.30 0.30 Buieldng discupp iort . h k NGO 11 8.00 7.15 1.55 0.74 2.29 missions the boriower has agr-eecl to ESS1' 20.00 7.21 395 3.95 reduce the scope of the project to the ICDP 10.00 PMHC component and has requested Completed Projects a two year extension to complete the ERI' 1 30.00 63.48 30.00 63.47 93.47 project. The Bank has agreed to MIGA Fund 10.00 10.00 10.00 process that request. ERP II 20.00 3.50 20.00 3.70 23.70 CDl' I 10.00 2.81 10.00 2.81 12.81 3 Gaza Industrial Estate (GIE) EItSP' 12.00 Worldi Barnk : US$10 In. TOTAL 367.69 147.19 238.23 105.87 344.10 IFC: US$9 millionUS$7 m. syndicated loans Multi-Donor Trust Fund EIB, USAID, the PA: US$65.5 million Donor Total Approval clate: March 24, 1998 Allocation Disbursed Closing date: June 30, 2004. The Holst Fund 285.72 285.72 Description: The GIE is locatecl on a TAT 22.97 23.60 50 hectare site at Al-Muntar in the PEACE Facility 26.16 2.72 northeast of Gaza (adjacent to the TOTAL 334.85 312.04 Israeli border) and is the first largely *Ile Blae's $12 ,jllik,n grnnt to the 111P' came fona,, accrucd investnoent income and was channeled th...ght export-orienteci inclustrial estate the II, lkn.d (dhh,r.se,ent, reIected in due llolt total below) established to generate sustainable T'hvsewAurs dlorv doiolciltdeparallelailFGfihauciflg. employment ancd stimulate industtial development in Gaza. The Project has institutionial clevelopment, while IFC further development until the political attracted foreign anci local investment, and EIB are financinig the developer/ and economic situation improves. ancl has facilitated joint ventures operator of the Project. Potential investors have also become between Palestinians an1d other Latest Developments: The GIE is scarce in recent months due to the investors. The GIE is managed ancl being cleveloped in three phases; depressed investinent environment, in operated by PIEDCO, a private sector Phase 11 construction was underway which GIE operations have at times company; regulatory oversight ancd by September 2000, but clue to the been directly impacted by closures. some offsite infrastructure services are crisis situation constiuction ceased, Prior to September 2000, some 34 finms proviclecl by the PIEFZA. The Worlcl except for finishing work on structures had leased space at the GIE, filling all Bank ancl USAID are provicling that were near completion. PIEDCO space macle available under Phase I; financing for off-site infrastructure ancd management has clecided to postpone of these, nearly 30 firms were itu.gust 2002 21 LAY-E.PM5 21 _ 10/31102.1:10 PM operating, and around 1,200 people of insurance against political risk for Mainstream Projects were employed at the GIE. The private investment in WBG. Under number of firms operating, ancd the the tenns of the Fund, investors who U ArabPalestineInvestmendFank. number of people working at the GIE are nationals of, or companies (APIB) has fluctuated considerably based on incorporated in a MIGA member IFC approved the US$3.74 million evolution in the closure ancl security country, or who are P'alestinian equity investment in May 1994. situations since October 2000. More residents of WBG, are eligible to obtain Arab Palestinian Investment Bank was infomiation on fimis operating at the guarantees, provicled that the IFCs first investment in the West Bank GIE can be found at investient is brought in from outside & Gaza, and was established in "www.piedco.com". WBG. The Fund currendy has the Ramallah in 1996 by the Arab Bank, capacity to issue guarantees for LIp to DEG, Enterprise Investmient Company a MicroenterpriseProject(MEP). US$5 ilmillion per project. If a project and IFC. APIB was also the first World Bank: US5 requires more insurance capacity, comprehensive comimlercial and IFC: US$7.5 requestecl by the project sponsor(s), investnent banking institutionl to be Netherlanc:s: USS 3 . m.MIGA will explore the possibility of established in West Bank & Gaza. Its Netherlanks: US$3 m n . obtaining coinsurance with public and primnary focus was intended to be in Aparticipdatineak: US$7l.5 m.9 private underwriters, including tracle finance (e.g. letters of creclits andi Approval date: April 8, 1997 coinsurance under MIGAs Cooperative discounting of bills), term financing Closing Date: July 31, 2002 Underwriting Plrogram. During FY99, (for industrial and commercial projects Description: The Project initiatecl a MIGA issued its first Contract of for expansion, modernization and program to finance microenterprises in Guarantee on behalf of the Trust Fund working capital needs), foreign the WBG through the banking system for a project in the tourism industy. exchange and money transfers, in order to: (a) promote emiiployment However, this contract was cancelled financial advisory services (to the local through private sector development; in FY01. The Trust Func remains open corporate sector ancd overseas (b) achieve commercial viability and forlapplications. Since inception of the investors) and agency arrangements. sustainability for microenterprise Funcl, over 20 applications have been APIB was expected to mobilize lending; and (c) build capacity in bothi received for almost US$400 million in wholesale funding from the clomestic the participating banks and the investments in WBG's infrastructure, and overseas markets. Further microenterprises by provicling manufacturing, real estate, services, expansion of AlIB's operations was to technical assistance. and tourism sectors. The interest of include money and capital markets LatestDevelopments: As ofJune30, seeking investimient guarantees from activities, treasury management 2002, over 1100 loans million were the Trist Fund continues to be strong. services, portfolio management ancl approved, of which disbursements of private banking. approximately US$ 12.1 million have As of December 31, 2001, APIB been made to projects. The disbursed approved 27 loans worth US$12.6 loans were estimated to have created IFC Projects million, ancd had an outstanding over 1,400 new full- and part-timile jobs. IFC Portfolio portfolio of US$8.8 million. Due to Since the crisis began in WBG in late the ongoing crisis, the pipeline for new September 2000, the pipeline for new Including tile tihree joint-projects lending has significantly cdecreasecl, lending has declined sharply, and focus above, IFC has commilitted US$25.89 ancd focus has shifted to managing the has shiftecl to managing the current million to three projects under the existing portfolio portfolio whicih has witnesseci an Mainstreamil Program. Under the increase in arrears. In view of the Extenclecd Reach Initiative, which persistent nature of the conflict and the supportecd projects in the US$0.25-s U Peace Technology Fund (PTF) reduced clemand for loans in an million range, seven projects were The project was approved in August uncertain business environimienit, the comimiliitted for US$7.42 million, out of 1998, with IFC investing up to US$12.6 Palestinian Authiority decidled not to which US$4.92 million was disbursed. million. extend the Trust Fund Creclit closing The Extended Reach Initiative was The Peace Tecinology Fund was set date and to return the uncommitted cliscontinued in mid 2000. up with a conmmitted capital of US$63.2 balace to the Trust Fuids for Gaza anci All IFC-financed projects have been million to provide equity capital for the West Bank for future emergency affected by the ongoing political crisis. productive investments in the West operations. Most private sector activity has been Bank & Gaza. IPTF was to encourage noticeably reduced, and most WBG economic cooperation between companiies are facing liquidity and P'alestinian and Israeli companies and, MIGA Operation severe operational difficulties due to if appropriate, invest in joint ventures a Investment Guarantee Fund the internal border closure. between Palestinian companies and (MIGA). Israeli or international companies, Worlcd Bank :US$10 In. thereby encouraging transfer of Woricl Bank zUS$10 m ~~~technology and employment The Fund, which is administered by . generation in dte West Bank & Gaza. MIGA, provicles guarantees in the form August 2002 22 LAY-E.PM5 22 4 10131102. 1:10PM PTF was expected to invest primarily O Jericho Motels Company (JMC) Banlk Group News in small - and medium - sized IFC approved the US$1.17 million loan companiesacross a broad spectrum of in August 1998. L Education Action Project high value added and/or employment Developed on 31,000 2 of land, theo generating industries. jericho Resor°t Village consists of a 60- On May 27, 2002 a workshop wat s Prior to September 2000, PTF invested ;00111 hotel, 48 b3ungalows, and heldc at he MinisE y of Elucation to US$11.0 million in three projects, but rocetom a aiiisAtattlcs launch the Education Action Pr-oject. US$1.0iiillonin lire i-oecs, utrecreational facilities. At a total cost The Workshop aimed to providle because of the ongoing crisis all of US$8.1 million, IFC provicled a 10.5- information on it's the project pipeline investments have been plt on year, US$1.17 imiillion loan, and the components and activities, as well as hol°. financing plan inclucled long-term to provide short-term training on loans from two local banks and one proure andrt-ermcialp luresn Cl Palestine Tourism Investment other international lending institution. procurement and financial proceclures. Company Ltd. (PTIC). The complex opened for coimiercial The latter part of the workshop could The project was approved in April operations in late 1998. However, due existing closures and restrictions on 1999, and IFC invested US$1.35 million to the ongoing crisis and closure, the movement. The Project was also in ecluity and US$8 million in long-tenn Project was forced to cease operations presenteci in the context of the Ministiy loans. in early October 2000. of Education's Five-Year Educational The project was the first international Development Plan. hotel in the West Bank. The 250 key D Arab Palestinian Storage hotel was built in Bethlehem at an Company (APSC) El Palestinian Higher Education estimatecl project cost of US$52 million IFC approved thie US$0.2 million loan Financing Strategy. that includecd the renovation of the in July 1998. famous Jacir Palace lanchdmark. EIB The lProject consisted of establishing a The World Bank has provided provided the project about EURO12 cold storage facility in Gaza widt a Technical Assistance for a higlher million in a long term loan. capacity to store about 5,000 tons of education financing strategy. The main The project became fuilly operational perishable food products. TIhe storage purpose of the strategy has been to under intercontinental Hotel Company method included both freezing, as well create a more effective, accessible, management in September 2000. But as cihilling to preserve dte products for efficient, sustainable, and accountable due to the ongoing crisis in the West long periods of time. The Project also higher eclucation systemii. In Bank & Gaza, tourism was one of the involvecd tr-ading in fruits ancl vegetables, cleveloping the strategy, it was notecd harclest hit sectors, and the complex mainly for sale in the off-season. IC that the level of public financial was forced to cease all operations in provicdecd a loan of US$0.2 illillion out support for Palestinian higher March 2001. The complex sustained of a total project cost of US$5.9 million, education is not now (nor likely in the some physical damage during the past The Project startecl operations in foreseeable future) to be sufficient to year ancl remains closed. September 1999. However, the borcler ensure financial sustainability of the closures in Gaza, and the ongoing crisis system, as it currently exists. have significandy reduced the Project's Therefore, major reforms are being Extended Reach Projects volume of operations, and in somiie proposed for public funds to he instances, operations were brought to targeted in ways to improve what will 0 Arab Concrete Products a coi-iiplete stop. remnain a largely public, not-for-profit, Company (ACPC) higher eclucation system. IFC approvecd the US$0.8 million loan in June 1997. IFC Technical Assistance D3 World Bank - West Bank This Project enabled Arab Concrete IFC's teclnical assistance efforts have Country Office Visited by Students. products Conmpany to utilize fully its been aimed at supporting the On August 1, 2002, the Worlcl Bank pronLuction capacity of ready-iix Palestinian Audtority's efforts to further Extemal Affairs Department hostedI a concrete, and expand its distribution broaden and deepen the Palestinian group of Political Science studlents of US$0.8 million out of a total project financial sector. IFC has also worked from Al-Quds University for a half-day cost of US$2.6 million. Due to the crisis closely witlh the Palestinian Authority semiiinar. The seminar presentecl the and m oility prblems of labor and iand the private sector to encouL-age the World Bank and its mission, not only nw materials theProjectmhas witnessed emiergence of new instruments and in the West Bank and Gaza ancl the a significant drop in operational levels, players in the financial sector andcl capital Middle East and Noith Africa Region, asignificant ceropin opesitional levels markets tlrough the development of but also around the Worlci. This and at certain times, it has come to a framework laws and institutions. IFC seminar is one of a series that the complete standstill. was involved with the preparation of World Bank intends to host in an effort clraft laws for Insurance, Securities, to raise awareness of its role in the Capital Markets Authority, Mutual West Bank and Gaza. Ftnds, Mortgage, Tax and Competition. Au.gust 2002 23 LAY-E.PM5 23 ,;_ 10/3/102, 1:10 PM * Co-Chair Secretariat for the New Bank Publications the characteristics, capacities, needs, and Donor Community Created. constraints of the Region's cultural sector and their relevance to overAll countiy The Norwegian Representative Office, THE REPORT ON PALESTINIAN development; 2) to take stock, describe, the Office of the Unitecl Nations Special OPTIONS and analyze the World Bank's past and Coorclinator, and the Worlcl Bank (as current support for preservation and Co-Chairs of the Local Aid * management of the Region's cultural Coordination Committee), have 1 heritage; and 3) to extract the lessons of established a Co-Chair Secretariat. The '1L , ;; experience and define the strategy mission of this new Secretariat is to - U framework for future Bank assistance for enhance the operation of current aid - .: preserving and managing the MENA coordination mechanisms, as well as - - i Region's patrimony. to improve information flow, and the U Voces Of The Poor, From Many quality, usability, and timeliness of e* Lands. information available to the Donor " 'From Many Lancls" gives us an Community. _ W1 t opportunity to meet the invisible people, The Co-Chair Secretariat is staffec with _ B see their invisible world, and hear their professionals seconded by each of the n voices as they talk among themselves Co-Chairs. The Secretariat currently and ta to us. consists of a Head of Office, Deputy Voices of the Ploor is a multicountry Head, and three Program Officers. research initiative to understand poverty _I * _ - - | ~~~~from the standpoint of tdle poor. Trhe The Co-Chair Secretaiat is located on Voices of the Poor Project was undertLken the first floor of the World Bank ----------------------:---- to present World Bank activities, ancldthe Building in Al Raim. Contact numbers The Report examines Pllestinian trade Worldc Development Report 2000/2001. are: labor, and growtlh outcomes duiing the There are three books from this Project: Tel.: 972 (02) 2344951 to 54; interim period, and the prospects for 1) Can Anyone Hear Us? This voluLmle Fax: 972 (02) 234 4956 growth under different policy scenarios gathers the voices of over 40,000 poor in the context of a Final Status women and men in 50 countries from the Agreenient. 'Thie Report will beavailable Worlcl Bank's participatory poverty on the Country Office Website, and assessments; 2) Ciying Out For Change. -~ STAFF NEWS copies for clisuibution can be obtained This book pulls together new field work a,t tle "Public Information Center of the conductecl in 1999 in 23 countries; and t Newly Recruited Staff / NGO World Bank office." 3) From Many Lands presents 14 counuy Depaplment. ~~~~~~~~~~~~~case studies and conCILudes withi an Department. . overview chapter on an empowering Shereen Shaheen, who has a NEW STUDIES: approach to clevelopment. backgrouncd in Development Studies and Mass Communication, has joined Fifteen Montlhs - Intifada, Closures and Ut FromEarlyCbildDevelopmentTo the World Bank Countiy Office as a Palestinian Economic Crisis: An Human Development. consultant to provide assistance in the Assessmiient. Englishub F cRport, English Investing in every child at an early age is supervision anc monitoring of the Worlcl and Arabic Summary Report. an investment in both human ancl Bank- financed Palestinian NGO Project. X'ong-Tcrn lolicy Options for the economiiic development for all. Chilcdrenl She is responsible for folowingup the Palestiniong Ecorm ojiy EnglishullRiport bom in poverty are far more likely to grow day-to-dy man followingo th rjc,Palsiia cnmy nlh lReot ndevelopecd in both body and m-indl. nystoriday thanagee pnt oflthe Project, nglish and Arabic Summary Report. Science tells us that Early Child implemented, ancd that pogress is made Strategy for Financing Palestinian Higher Development (ECD) is criticail, and marks towards aclhieving the Project's Education. English. a child for life, and, young children w\vo objectives and expected outputs. aue well nurtured, (10 better in school, Adclitional functions inclucle taking part RECENT PUBLICATIONS: ga ctonomhe s.itis in this context that in engagement of the Bank in a policy tle Bank hosted a conference to review dialogue with civil society, and * Cultural Heritage And the state of knowledge on brain sustaining clialogue as input to the Development: A Framework For development, dte link between ECD ancl Banik's programs. Prior to joining the Action In The Middle EastAnd Nortb human development, the standarcds of Bank, Ms Shaheen workecd at Massar, a Africa. care to improve children's educational private consulting firm in Raiallai, Care This Report analyzes the culturl. heritage outcomes, the qualitative and qua.nrtitative Internatonal in Jorclan, ancd a project sector in the countries of the Middle East measures of effective programs, andic for Save the Children in Jordan. andcl Nortdh Africa, andl the World Bank's elements of quality in ECD programs. policy and operational experiences in this sector over the past six years, 1996- This Book contains the proceeclings of 2001. It has three objectives: 1) to explore the Conference on Investing in Our August 2002 24 LAY-E PM5 24 4 10131102, 1:10 PM Childiren's Future, which brought together leading experts, academicians, Contact Numbers and practitioners from nongovernmental organizations, civil society, govenmments, ancd international organizations. West Bank Office Numbers: External Affairs & Aid Lvp Switchboard 02 - 2366500 Coordination Department a Li1vestock Development: Imp- lications On Rural Poverty, The Fax 02 - 2366543 Ma'moon Sbeih Environment, And Global Food 02-2366511 Security. Country Director This Book was prepared by a group of Nigel Roberts Institutional Development livestock specialists from the World Bank. 02 - 2366505 Stefano Mocci This Book argues that livestock can play 02-2366535 an important role in poverty reduction, Deputy Head of Office/ that the effects of livestock on the Social DevelopmenVNGOs Projects Disbursements environment can be adequately managed, and that livestock cafi make Sima Kanaan Adel Odeh an imilport ant contribution to global foocd 02-2366506 02-2366515 security. This will only happen, however, if an appropriate policy Health/Education Public Information Center fiamework is put in place, one that Salam Kanaan Mary Koussa enables the intiroCuction of equitable, 02-2366534 02-2366529 clean, and safe technologies throughout the foocd chain. Finally, the Book summarizes the type of activities that the Infrastructure Development World Bank shoulIc support. Majed El-Bayya Gaza Office Numbers: 08-2824746 O A Strategy For Development. Coordinator During his first year as Chief Econonmist Senior Economist Husam Abu Dagga ancI Senior Vice President of the World John Wetter 08-2823422/2824746 Bank, Nick Stem articulatetl the oLtdilles of an emerging strategy for clevelopment 02-2366522 Fax:08-2824296 in a series of speeches. Together they provicle an analysis of development experience and an agenda for action in linternational Finanice Corporation the coming years. In his introcluction, the Tel: 02-2366517, Fax: 02-2366521 author explains the evolution of his ideas, starting with early work in Africa and India, widiin the larger context of changes l and Gaza L~d4te edihd leam, in clevelopment, thinking, and strategy. The speeches that follow draw on his Ma'moon Sbeih - Editor varied experience and on the research findings and operational experience of Mary Koussa the World Bank. 'I'he first speech provicles Hege Wade an oveiview of die past five dlecades of Sebastien Dessus development. Speeclhes that follow explore cuLrent development issues in Claus Astrup India, Indonesia, Pakistan, ancl China. A Rami Khoury Strategy For Developmiient is then With special thanks to Mary Saba outlined: bullcling an economic climate that facilitates investment aInd growth, and For further infonnation contact: empowering poor people to participate in that growth. A concluding speech Ma'moon Sbeih examines the role of the international Tel. (972)22366511 financial institutions in promiioting email: rnsbeih@worldbank.org investment and overcoming poverty. Tbe 'West Bank and Gaza Update' can also befound on tbe Internet at: Would you like to get infomuntion by bttp://www.worldbank.org FMail on recent World Bank publica.tions, please send yotir EMail address to: '!mkoussa@worldbantkorg". August 2002 25 LAY-E.PM5 25 10/31102, 1:10 PM