Foreign Loans And Their Role In Economic Development Of Palestine

Discussion Committee: 
ميساء وليد أحمد عبادي
This study is an attempt to shed light on Palestinian foreign borrowings and the role of these loans in Palestinian economic development. The study gives first a theoretical background on foreign borrowings and its importance in helping the country to fill the gap between local saving and investments. The experiment of both Jordan and Egypt in foreign borrowing was discussed. It was found that both countries did not benefit from foreign loans .On the contrary these loans are still a burden on both countries despite several rescheduling agreements and forgiveness of certain percentages of their debt. The debt burden of foreign loans was analyzed for each loan, and was found that the debt service is rather low due to the nature of these loans. Most of them are soft loans (long period and low interest rate). In addition, the total amount of outstanding debt is still low estimated at $ 605 million, which represent 12.5% of GDP and 85.4% of total exports of goods and services. The sources of Palestinian foreign borrowings as well as the authorities responsible for signing, receiving and following up of these loans were discussed. It was found that the main sources of borrowings are: the World Bank, which lends 43.3% of the total loans and the European Investment Bank 28% . PECDAR and the Ministry of Finance were the major Palestinian authorities signing and responsible for foreign borrowing accounting for 84% of the total foreign loans. There are some discussion about the distribution of these loans among various sectors in Palestine. It was found that 45.5% of the total loans were used to finance infrastructural projects and in major cities. Productive sectors and rural areas received a rather very small amount of these loans. Finally some recommendations have been of offered to help Palestinian authorities better managing and controlling their foreign debt
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