Palestinian authority aims to securitize $200 million of debt

KUWAIT Sun Sep 30, 2012 4:54pm EDT

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KUWAIT (Reuters) - Palestinian authorities are aiming to securitize an initial $200 million of some $1.3 billion worth of government debt by the first quarter of 2013 to help reduce state borrowing from local banks, a top banker said on Sunday.

"The Ministry of Finance is much more ready for securitizing the old debt rather than creating new debt, because we are not even rated," Palestinian Monetary Authority Governor Jihad al-Wazir said ahead of a Monday meeting of Arab central bankers in Kuwait.

"This will be only to the primary market, only to the banks, not to the public and not to overseas public," he told reporters.

The Palestinian Monetary Authority (PMA), which oversees operations in both the West Bank - where the Palestinian Authority is based - and the Gaza Strip controlled by the Islamist group Hamas, will manage the securitization on behalf of the Finance Ministry.

"What is important about this is that it will transfer some of the existing debt that is direct borrowing from the government into securities which are tradable between the banks," Wazir said.

"It will add to stability, it will generate an interbank market and additionally as an incentive it will be used as daily collateral in our payment system."

The securitization would likely see the PMA convert a chunk of outstanding Palestinian debt into bonds or other tradeable securities that would then be sold to local banks, in order to cut its direct borrowing requirements.

The Palestinians, a stateless people, do not have their own currency and the Israeli shekel is used for most day-to-day cash transactions.

The PMA, which has reserves of $1 billion, regulates banks operating in the Palestinian territories, occupied by Israel in a 1967 war.

The government budget deficit was likely to be around $1.3 billion this year, up from a $950 million gap projected in the budget, Wazir also said, adding $1.36 billion was a red line for state borrowing from banks.

DONERS

"The difference is likely to come from donors. There are a number of talks with Arab countries, particularly in the Gulf," he said.

"Also maybe through the World Bank, maybe through the World Bank trust fund. The situation is still in a crisis mode."

In September, the United Nations UNCTAD agency issued a gloomy outlook for the Palestinian economy, arguing that tougher Israeli policies and settlement expansion were pushing the occupied territories and Gaza deeper into poverty.

The situation had been aggravated in 2011 by a sharp drop in foreign aid, which for years provided a vital support, dimming any hope for an upswing even in the longer term, it said.

Wazir said the economy was doing "Ok" under the circumstances with inflation-adjusted gross domestic product seen growing around 5 percent this year, down from over 6 percent in 2011.

"If the Israelis lift restrictions we can grow by 14-15 percent annually for a number of years," he said. (Reporting by Martin Dokoupil and Sylvia Westall; Editing by Sophie Hares)

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Comments (1)
DeanMJackson wrote:
Firstly, the term “Palestinian” was a national designation given to the inhabitants of the Jewish Homeland in 1922. Other than that, it had no ethnic/intrinsic nationalist value,* which is why the territory was re-named Israel on May 14, 1948 when the Jews declared independence.

Secondly, Arab governments resurrected the defunct “Palestinian” name in 1963 when they were forced to alter their strategy towards Israel, because Israel in 1963 had either tested their first nuclear bomb or actually acquired their first nuclear bomb.

This brings us to the Six-Day War, which was planned to be lost by Arab governments (with the cooperation of the USSR), so as to operationalize the Arab governments’ proxy strategy, using the newly-minted “Palestinians”.

Note that Arab governments never did create an Arab state for West Bank/Gaza inhabitants between 1948-1962, nor a “Palestinian” state (when “Arabs” was changed to “Palestinians”) between 1963-May 1967.

The next phase of the Arab governments’ Long-Range Strategy will be to have Arabs in the West Bank and Gaza renounce their claim for an independent state and opt to become Israeli citizens instead, which is what they are according to the Palestine Mandate of 1922. When one throws in Arabs living in the refugee camps, the Jewish inhabitants of Israel will be electorally out-voted, leading to the reincorporation of the territory that is now Israel back into the Arab fold.

There is, however, one tactic that Israel will use to thwart the “new” Arab governments’ Long-Range Strategy:

Israel’s counter-strategy to offset the looming Arab electoral majority will be to offer Jews living all over the world automatic Israeli citizenship, thereby conferring the right to vote in Israeli elections, swinging the electoral balance back overwhelmingly to the Jewish side.
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*”The First Congress of Muslim-Christian Associations (in Jerusalem, February 1919), which met for the purpose of selecting a Palestinian Arab representative for the Paris Peace Conference, adopted the following resolution: “We consider Palestine as part of Arab Syria, as it has never been separated from it at any time. We are connected with it by national, religious, linguistic, natural, economic and geographical bonds.”[60]” — Wikipedia

and

“An all-Palestine Congress was held in Jerusalem between January 27 and February 10, 1919, to formulate a common policy, called “program”, on Palestine to advise Faisal while attending the Paris Peace Conference on behalf of the Arabs.

The Jerusalem Congress was presided over by ‘Aref Pasha al-Dajani who was, at the time, the president of the Jerusalem branch of the Muslim-Christian Association mentioned earlier. (Representatives of the Association also attended the General Syrian Congress in Damascus.)(8)

The Jerusalem Congress, resolved to reject political Zionism and to accept British assistance on condition such assistance would not impinge upon Sovereignty in Palestine.(9) Basically, the Congress wanted Palestine to be part of an independent Syrian State to be governed by Faisal of the Hashemite family. It also preferred U.S. political tutelage, should this be necessary, or British tutelage, as a second choice, but under no circumstances would the Congress accept French political guardianship.” – PALESTINE: FACTIONALISM IN THE NATIONAL MOVEMENT (1919 – 1939), DR. MANUEL HASSASSIAN.

Sep 30, 2012 8:20pm EDT  --  Report as abuse
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