- $32 million to Quds Bank to support Palestinian private sector
- Team Europe response to tackle the economic impact of the COVID-19 pandemic
The European Investment Bank (EIB) is supporting the Palestinian economy with a $32 million line of credit to Quds Bank to be on-lent primarily to local small and medium-sized enterprises (SMEs) that have been severely affected by the economic consequences of the coronavirus outbreak.
This operation is part of the support package in countries outside the European Union in the context of Team Europe’s response to help mitigate the impact of the coronavirus pandemic.
The EIB financing also comes under the Economic Resilience Initiative (ERI), a joint EIB and EU programme aiming to support the countries in the Mediterranean region that have been most impacted by the refugee crisis.
Prime Minister Dr Mohammad Shtayyeh said during the signing ceremony: “This is a significant, timely agreement that intersects with the Palestinian government’s goals and priorities to support and strengthen the private sector, especially SMEs that have been affected by the COVID-19 pandemic. We thank the European Union and the European Investment Bank for this strategic partnership. Europe has always been on the side of Palestine politically while providing economic support and building its institutions, in order to establish an independent and sovereign Palestinian state along the 1967 borders with East Jerusalem as its capital.”
Flavia Palanza, EIB Director of Operations in Neighbouring Countries said: “The provision of funding through our cooperation with the Palestinian banking sector is one of the EIB’s top priorities to support the resilience of the private sector during this unprecedented crisis. Our partnership with Quds Bank aims to make available vital financing for SMEs at a time when liquidity is scarce and in high demand.”
The European Union Representative Sven Kühn von Burgsdorff said: “Six months after the first meeting of the EU-Palestine Investment Platform, I am very pleased to witness today a historic signature ceremony dedicating support to the Palestinian private sector with an unprecedented amount of finance via innovative instruments. This support comes during a period when Palestine is going through a difficult time and it demonstrates that in spite of the many challenges it faces, Palestine does offer viable business opportunities worth investing in. This package of financing will help strengthen the Palestinian economy, contributing to economic independence, prosperity and welfare.”
Kais Zuhaika, Head of Financial Institutions at Quds Bank, said: “This project comes in light of the EU commitment towards our joint vision to revive the Palestinian economy amid unprecedented times and economic hardship. SMEs are vital to our sustainable economic growth, and deploying such initiatives will unleash new opportunities and support financial inclusion in marginalised and underbanked communities.”
Background information:
The EIB operations are part of a comprehensive package of economic assistance that the European Union has allocated to support the Palestinian economy in its recovery from the COVID-19 crisis. The overall package amounts to around €85 million of EU funds, which is expected to mobilise over €400 million in soft loans and investment for the Palestinian private sector. The bulk of this assistance is to be channelled to the Palestinian economy through EU financial institutions and will reach the private sector via local banks and microfinance institutions.
SMEs are the backbone of the Palestinian economy as they account for over 95% of local businesses, contribute more than 55% to the GDP, and employ 85% of the active working population. As a consequence of the COVID-19 outbreak, many companies have experienced a decrease in turnover and profitability, leading to payment delays and an increased demand for liquidity. It is now crucial to step up support to private sector businesses, thus helping to protect jobs and keep the economy going.
Established in 1995, Quds Bank is the third-largest bank in Palestine and provides a comprehensive range of financial services to its customers in the retail, micro, SME, corporate and diaspora banking segments.