JERUSALEM, July 2 Israel unsuccessfully sought a
$1 billion loan from the International Monetary Fund (IMF) for
transfer to the Palestinian Authority to prevent its financial
collapse, Israeli and Palestinian officials said on Monday.
The IMF turned down the request, according to Israel's
Haaretz newspaper, because it did not want to set a precedent of
one state getting a loan on behalf of a none-state body.
The aid-dependent Palestinian economy in the West Bank is
facing a deepening financial crisis due to a drop in aid from
Western backers and wealthy Gulf states as well as Israeli
restrictions on trade.
"We attempted to obtain a loan of $1 billion from the IMF
through Israel. We didn't succeed," a senior Palestinian
official, who spoke on condition of anonymity, told Reuters.
A source in Israeli Prime Minister Benjamin Netanyahu's
office confirmed that the IMF turned down Israel's loan request
on behalf of the Palestinians. The source gave no other details.
Haaretz said Palestinian Prime Minister Salam Fayyad and
Bank of Israel chief Stanley Fischer, both former IMF officials,
decided Israel would ask for the bridge loan because the
Palestinian Authority is not a member state and cannot receive
financial support from the IMF.
Under interim peace agreements with Israel, the Palestinian
Authority exercises limited self-rule in the West Bank,
territory Israeli forces occupied in a 1967 war.
The IMF's representative office for the West Bank and Gaza
Strip did not provide an immediate comment. Fayyad's office was
not immediately available for comment. A spokesman for the Bank
of Israel declined to comment.
A brief report by the IMF on the economic situation in May
described the Palestinian Authority's fiscal crisis as "very
challenging" and said foreign aid to the PA was "far less than
needed to finance the deficit" of around $1.3 billion in 2012.