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For the first time, government bonds issuance on behalf of the State of Palestine

2014-04-09

The Palestinian Government decided, on Tuesday, to approve restructuring part of the government debt to the Palestinian Banking System using the securitization mechanism, through issuing government bonds. This is based on the government’s strategic plan to regulate the government debt with the banking system, restructure the non-performing and in arrears loans in addition to preserving the rights of the public treasuring and easing the financial burden, facing the challenges, setting the Palestinian state foundations and preparing the banking system to deal with the bond markets and government debt instruments. In this context, the governor of Palestine Monetary Authority PMA said that decision to issue government bonds is a major achievement for the Palestinian government and the PMA also, whereby, for the first time since the year 1947, an issuance of bonds on behalf of the State of Palestine will take place. He also added that the first phase of issuing the government bonds worth $200 million will be for 3 years and will be traded between banks only. This issuance will stimulate the non-market banking by enhancing the financial stability and the stability of the payment system “ Buraq” . It will also assist the government in better managing the public debt. The PMA governor also added that this decision came in cooperation with the Ministry of Finance and in line with the banks, whereby, issuing government bonds is a rescheduling and securitization of government current debt towards local banks. He also emphasized that this issuance will not increase the government’s debt and will not burden the government and banking system any addition risk; indicating an improvement in the Palestinian financial management. It is a tool that helps in developing the monetary policies and strengthening the financial stability in Palestine.