The Palestinian Central Bureau of Statistics and Palestine Monetary Authority Announce Preliminary Findings of the Palestinian Balance of Payments of the Second Quarter of 2021

US$236 Million is the Current Account Deficit of the Palestinian Balance of Payments of the Second Quarter of 2021

The Palestinian Central Bureau of Statistics and Palestine Monetary Authority have published the preliminary findings of the Palestinian balance of payments of the second quarter of 2021. This has been part of the periodic joint publication of the Palestinian balance of payments and a continuation of the joint efforts of the two institutions. However, the data do not include that part of Jerusalem Governorate, which was forcibly annexed by the Israeli occupation shortly after its occupation of the West Bank in 1967.

Commodity Trade Deficit is the Main Reason for the Current Account Deficit

Preliminary findings of the Palestinian balance of payments in the second quarter of 2021 indicate a continuing current account deficit (goods, services, income and current transfers), which amount to US$236 million. The current account deficit is due to the $1,354 million deficit in the commodity trade balance, as well as the $221 million balance of services deficit.

Compensation for Workers in Israel is the Main Reason for the Income Account Surplus

In contrast, the income account (workers' compensation and investment income) recorded a surplus of US$831 million during the second quarter of 2021. The $766 million compensation for workers in Israel was the main reason for the income account surplus. Investment income received from abroad amounted to US$76 million, mainly as a result of income received from the portfolio of investments abroad, as well as interest received on Palestinian deposits in foreign banks.

Current Transfers from Abroad to other (non-governmental) Sectors are the Main Reason for the Surplus of Current Transfers

Net current transfers also recorded a surplus of US$508 million, up 20% from the previous quarter. Current transfers from abroad totaled US$592 million. Current transfers to the government sector accounted for 21% of the current transfers, while current transfers to other sectors accounted for 79%. Donor remittances accounted for only about 18% of total current transfers from abroad.

Preliminary balance of payments findings also indicate a capital and financial account surplus of US$81 million, as a result of the $109 million surplus in the capital account, while the reserve assets of Palestine Monetary Authority increased by US$50 million during the quarter compared to a rise of US$35 million in the previous quarter.

It should be noted that the balance of payments is the tool that determines the state's economic status for the outside world and the size of foreign debt, which helps researchers and decision makers develop appropriate economic policies and development plans to achieve the external balance that ensures the state's stability and economic growth. The preparation of the Palestinian balance of payments data is based on the latest international recommendations taking into account the particularity of the Palestinian situation.