"A breakthrough in the peace talks could launch major donor initiatives, such as the Economic Initiative for Palestine, which could boost average annual real GDP growth to about 5?6 percent in 2014-19. On the other hand, failure of the peace negotiations could trigger a political and security crisis that would lead to accelerated arrears accumulation and economic contraction, especially if donors signal scaling back their support,''
"Structural reforms are critical to improve economic outcomes regardless of the results of the peace talks. If peace talks succeed, the Palestinian Authority would need to raise its implementation capacity through improved infrastructure and institutional reforms to optimize the economic impact of new financing and investment. The Economic Initiative for Palestine and other sources of support will present difficult economic management challenges, and cannot by themselves overcome persistent fiscal deficits and aid dependency. If peace talks do not succeed, the outlook could worsen and a new financing model aimed at lower deficits and a change in the composition of spending in favor of development would be urgently needed. In either case, support from the international community and broad-based and comprehensive easing of Israeli restrictions will be needed to underpin the Palestinian reform efforts,'' he added.
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