IsDB Group Commits $1.2 Bn to Support Post-Pandemic Recovery

The Islamic Development Bank (IsDB) Group commits to support post-pandemic economic recovery (Asharq Al-Awsat)
The Islamic Development Bank (IsDB) Group commits to support post-pandemic economic recovery (Asharq Al-Awsat)
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IsDB Group Commits $1.2 Bn to Support Post-Pandemic Recovery

The Islamic Development Bank (IsDB) Group commits to support post-pandemic economic recovery (Asharq Al-Awsat)
The Islamic Development Bank (IsDB) Group commits to support post-pandemic economic recovery (Asharq Al-Awsat)

The Islamic Development Bank (IsDB) Group, the AAA-rated multilateral development bank of the Muslim world, has announced $1.2 billion in funding commitments as part of its effort to support the post-pandemic economic recovery among its member countries.

The funding commitments, which comprise around 30 MOUs and agreements signed between IsDB Group entities and counterpart institutions in member countries in Africa and Asia, were signed during the Group’s 2021 Annual Meetings held in Tashkent, Uzbekistan.

IsDB announced the Economic Empowerment Fund for Uzbekistan, established in collaboration with the Uzbek government and private sector investors from Saudi Arabia.

The $100 million fund, of which $20 million has been committed by IsDB, aims to create 100,000 jobs by supporting micro, small, and medium-sized enterprises (MSMEs). It is the first impact investment fund established in Uzbekistan.

Other commitments to Uzbekistan included a significant $200 million investment to support economic development in rural regions in the country.

IsDB also signed an agreement to finance the second phase of a project devoted to expanding access to oncology services in Uzbekistan by equipping treatment centers and expanding medical training.

The Islamic Trade Finance Corporation (ITFC) will provide trade financing to several countries to support the import of strategic commodities, including energy products and foodstuffs.

The Union of Comoros will receive $392 million over the next three years to support food and energy security.

Burkina Faso will receive $100 million to support the purchase of refined petroleum products for the country’s energy sector.

ITFC also signed similar agreements with Guinea and Maldives, committing $100 million and $75 million respectively, to support the import of fuel and food commodities.

Furthermore, IsDB signed several agreements focusing on economic development. The Bank will also fund two significant projects in Benin, with a combined value of $150 million.

The first project will support community health and nutrition, supporting Benin’s goal of providing universal health coverage by 2025.

The second project will support upgrades to the storm draining system of the capital city of Cotonou to reduce the risks of flooding.

The Group Chairman, Mohammad al-Jasser, said that the COVID-19 pandemic taught difficult lessons about the fragility of national economies in a globalized world.

“We are using the opportunity of our annual meetings to ensure that the power of multilateralism can help create stronger, more resilient economies in the long term.”

The Bank’s response to the COVID-19 pandemic included a $4.56 billion Strategic Preparedness and Response Program (SPRP), which is estimated to have delivered economic assistance to more than 55 million people.



Israel’s ‘Economic War’ Chokes Occupied West Bank

Palestinians queue to withdraw money from an ATM in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024.
Palestinians queue to withdraw money from an ATM in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024.
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Israel’s ‘Economic War’ Chokes Occupied West Bank

Palestinians queue to withdraw money from an ATM in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024.
Palestinians queue to withdraw money from an ATM in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024.

Palestinian teenagers bounced on trampolines and jumped through hoops inside a towering tent on the outskirts of Ramallah, the financial hub of the occupied West Bank.

But the circus students weren't the only ones bending over backwards in the pavilion: the school's director faced financial hurdles to buy the tent from Europe and trampolines from Asia.

"We are suffering with international payments," said Mohamad Rabah, head of the Palestinian Circus School, describing a bureaucratic process that could delay equipment delivery by up to a month.

Banking in the Palestinian territories is challenging, with the Palestinian Authority (PA) under scrutiny for potential terror financing, hindering transactions.

Israel has occupied the West Bank since 1967, with strong economic ties allowing two Israeli lenders to serve as correspondent banks in the Palestinian territory.

But this may change if Israel's far-right Finance Minister Bezalel Smotrich carries out threats to sever a vital banking route next month.

Since Hamas's October 7 attack triggered the Gaza war, Israel has imposed economic curbs on the PA, withholding tax revenues it collects on its behalf.

Smotrich said this week he had redirected $35 million in PA tax revenues to families of "terrorism" victims, a move condemned by the United States.

After three European countries recognized Palestinian statehood in May, Smotrich told Prime Minister Benjamin Netanyahu he would not extend indemnity to banks that transfer the funds from the end of June.

Israel's Bank Hapoalim and Israel Discount Bank need protection, expiring on July 1, to avoid sanctions for dealing with Palestinian lenders.

Israel's central bank and finance ministry declined to comment when contacted by AFP.

A Palestinian fruit vendor arranges his street cart in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024. (AFP)

- 'Humanitarian crisis' -

The banking channel used to pay for West Bank imports -- including essential goods like water, fuel and food -- handles $8 billion yearly.

Palestinian businesses receive nearly $1.7 billion annually for exports, according to the Palestine Monetary Authority.

"For us, because our economy is dependent on the Israeli economy, because Israel is controlling the border, the impact will be high," said PMA governor Feras Milhem.

The Palestinian economy is largely governed by the 1994 Paris Protocol, which granted sole control over the territories' borders to Israel, including the right to collect import duties and value-added tax for the PA.

Palestinian livelihoods have also been hurt by bans on laborers crossing into Israel and by a sharp downturn in tourism in the territory, including a quiet Christmas season in Bethlehem.

The United States has urged Israel to improve conditions, warning that severing the banking route would have a dire impact on the West Bank economy.

"I believe it would create a humanitarian crisis in due course if Palestinian banks are cut off from Israeli correspondence," US Treasury Secretary Janet Yellen said last month.

Western governments fear Israel's economic policies could destabilize the West Bank.

"The banking system may collapse and therefore the PA may collapse as well," a European diplomatic source in Jerusalem told AFP on condition of anonymity.

"The PA is in a financial crisis and it could collapse before August."

A Palestinian vendor unloads his stock in front of a shop in the main market in Ramallah city in the Israel-occupied West Bank on June 9, 2024. (AFP)

- Digital currency -

Palestinian businessmen say their bottom lines have been hit since October 7.

Imad Rabah, who owns a plastics company, said his net income had fallen 50 percent in one year.

Musa Shamieh, who owns a womenswear company said the Israeli policies were designed to push Palestinians to leave the West Bank.

"They want us to leave our land and they know it will be hard for us to stay if we can't do business," Shamieh said.

Israel's harsh economic policies could eventually drive Palestinian policymakers to pursue sweeping changes to the monetary system.

"We need to work on a plan B when it comes to the trade relations," said Milhem, governor of the PMA, which uses an image of the former Palestinian pound as its logo.

Yousef Daoud, professor at the West Bank's Birzeit University, said the territory could scrap the shekel as its de facto currency in favor of a digital alternative.

"We can make our e-currency, just collect all the shekels, issue an equivalent amount of Palestinian pounds, one-to-one fixed exchange rate, and have the Palestinians deal with e-currency," he said.

"Somehow, eventually, we'll get rid of the shekel."