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Commission contributes €14 million
to the Euro-Palestinian Credit Guarantee Fund
Today the Commission is signing
its €14 million contribution to the newly established
European-Palestinian Credit Guarantee Fund. The
Guarantee Fund, led by the German Development Bank
(KfW), will support Palestinian small and medium size
enterprises’ financing from local banks in the form of
soft loans and grants. This €29 million Fund will be
made up of contributions from the Commission (€14
million), KfW (€5 million), and the European Investment
Bank (EIB) (€10 million). In addition to the Fund’s
capital, the financing partners are providing technical
assistance to the European-Palestinian Credit Guarantee
Fund and partner banks with a view to strengthening the
financial sector in the Palestinian Territories.
Following Gaza disengagement, a special effort will be
made to promote loans in Gaza. The creation of a loan
guarantee scheme was an area highlighted by the Quartet
Special Envoy for disengagement in his Rapid Action Plan
as being important to support economic revival.
In Brussels, the Commissioner for External Relations and
European Neighbourhood Policy, Benita Ferrero-Waldner,
commented: “Small and medium enterprises can be the
driving force for economic growth, job creation and
poverty alleviation. This initiative is a major step to
revive the Palestinian economy.”
The Palestinian economy has been economically depressed
and badly damaged since the onset of the second Intifada
at the end of 2000. Five years of economic crisis have
severely compromised Palestinian living standards with
the International Monetary Fund estimating GDP per
capita at $979 in 2004, down from $1,410 in 2000.
Poverty and unemployment levels have risen significantly
since the beginning of the second Intifada.
Official estimates show that there are about 93,000
small and medium enterprises operating in Palestine.
Ninety percent of those employ 20 persons or less. The
European-Palestinian Credit Guarantee Fund will target
these enterprises.
The signing of the agreements is the result of extensive
research, design, and donor-coordination. The Fund’s
principal office is located in Ramallah and another
affiliated office will be opened in Gaza. Local partner
financial institutions have welcomed and supported this
initiative which they consider as a major step to revive
the economy.
The Commission has already set out its commitments made
in 2005 to support the Palestinian people, including
support for infrastructure reconstruction in the context
of Gaza disengagement . The Commission is working on its
2006 programme of assistance.
For more information:
The EU's relations with West Bank and Gaza Strip:
http://europa.eu.int/comm/external_relations/gaza/intro/index.htm |