Minister - MNE

The development of the private sector in the Palestinian Territories has been significantly constrained by an unstable environment resulting from the uncertain political situation and periodic Israeli closures and severe mobility restrictions. Particularly in light of deteriorating political and economic conditions and suspended peace negotiations, however, capacity strengthening of public economic core institutions is critical for developing, implementing and monitoring appropriate macro and sector policies and providing an adequate legal and regulatory framework for private sector development.

Since 1998 GTZ has been supporting the Ministry of Economy, Industry and Trade in establishing a Management Information System as well as the Ministry of Finance in upgrading the customs administration towards international standards. In 2003 both interventions were merged into a new Economic Policy Advice Project with an extended concept and objective. The current phase will run till the end of 2006.

Improving the performance of essential economic functions involves the considerable rationalization and upgrading of work systems, service delivery mechanisms and staff skills. The project’s aim is to enhance the professionalism of the Ministry of National Economy/MNE and Department of Customs & Indirect Taxes/MoF and develop private sector promoting competencies in the areas of economic policy formulation and implementation.

The project actively supports key domain areas (market economy, public administration, financial accountability) of the up-dated PA reform agenda aimed at making the government more efficient and effective. Both counterpart institutions have already gained credibility as reform-oriented change agents.

Given the problems associated with the existing policy framework, the current emphasis is on further strengthening priority business processes, work procedures and decentralised, computer-supported service delivery systems. This is being done in close co-operation with private sector clients thus enhancing business – government interactions and consultation. A Palestinian customs act being in line with internationally accepted principles and standards is under finalisation.

The fundamental prerequisite for improving the environment for private sector development and economic activity is the reduction of political instability and the return to free movement of goods, people and services. Only in such a context will the private sector be able to achieve its potential for job creation and economic growth. The PA nevertheless has a range of policy options at its disposal to address necessary improvements in the institutional and regulatory framework for stimulating a more dynamic private sector role in the future. The project will continue to support its partners in policy measures addressing areas currently within Palestinian control.