The International Monetary Fund (IMF) has rejected a request from Benjamin Netanyahu to offer the Palestinian Authority a $1 billion loan, because the PA “is not a state”. The Israeli Prime Minister made the request via the governor of the Bank of Israel, Stanley Fischer, after discussions about the PA’s financial crisis with the Ramallah Prime Minister Salam Fayyad.
If agreed, the loan would have been repaid through Israel. The IMF said that it rejected the Israeli request because it did not want to set a precedent of a state taking a loan on behalf of a non-state entity. It is believed that the request was made in April during the IMF’s annual conference in Washington.
Fayyad told Fischer that Europe and the US are unable to increase their financial support for the PA because of the economic crisis; Arab States are not transferring the funds they have promised; and Palestinian banks are refusing to extend any more credit to the government due to its inability to make debt repayments. Insider sources claim that Fayyad and Fischer are still discussing the financial problems in the hope of finding a solution and preventing the potential collapse of the authority.