PA economy in the red

The International Monetary Fund urged Israel Thursday to ease financial restrictions on Palestinian Authority, warning that the PA economy would otherwise not be viable.

In a report published ahead of a September 23 meeting in New York of donors to the Authority, the IMF said the Palestinian Authority faced a budget deficit of $300 million (225 million euros) by the end of 2013.

"The PA's finances are not viable over the medium term if the current model of financing large deficits with unpredictable aid flows is maintained," the report said.

It predicted that PA GDP growth would slow from 11 percent in 2011 and 5.9 percent in 2012 to 4.5 percent by the end of this year.

The IMF said the West Bank and Gaza Strip's economic prospects were "dim under (the) status quo," and that resuscitating finances required the removal of "obstacles to economic growth." These included, notably, "a broad-based and sustained easing of Israeli restrictions, not linked to specific projects and underpinned by clear progress in the peace process."

The IMF said in July that Israel's tight restrictions hinder the growth of the Palestinian private sector, holding back the economy.