WBG Pub Sec Fin Mgmt Ref Struc Adj Oper

closed

This is an emergency structural adjustment operation, being processed in parallel with the Public Financial Management Reform Trust Fund. It supports the same reform program, and requires the same prior actions for Board presentation. This operation recognizes the very significant progress that the Palestinian Authority (PA) has made in improving the quality of its financial management, and supports further improvements in this area. The operation is intended to provide budgetary support to the PA during a period of acute economic, and fiscal crisis, therefore it will help leverage contributions from other donors, by encouraging them to channel their funding through the new trust fund. The project seeks to help the PA avoid fiscal insolvency, contribute to the economic rehabilitation of the West Bank and Gaza, and, help advance the broader hope for peace, and stability in the region. There are nevertheless, internal and external risks to the program. Internally, two risks worth noting: first, it is the risk to the management of funds - however, as expressed in the recent Country Finance Accountability Assessment, a number of improvements, i.e., internal audit, financial control and payroll functions, provide assurance on eligible and budgeted expenditure spending; second, there is a political and administrative risk that the PA's public financial management reform program, could lose momentum, and stall. And, externally, there is a risk that the PA will be unable to obtain enough funding to cover its revenue gap, placing the operation effectiveness in doubt.