In Press Release Palestine Monetary Authority said that its efforts succeed to maintain the Stability, Soundness, growth and sustainability of the Banking System Despite the Current Financial Crisis.
His Excellency the Governor of Palestine Monetary Authority (PMA), Mr. Azzam Shawwa, stated that the persistent efforts of the PMA had achieved the desired results in terms of enhancing the strength and financial stability of the banking system. By adhering to international law, standards and practices and investing in the development of competent and qualified staff and cooperating with relevant stakeholders, the PMA has been able to achieve its objectives, that enabled her earn its prestige and credibility at the local, regional and international levels.
Despite the current Palestinian Authority’s financial, the Palestinian banking system has been able to maintain its strength, soundness, stability, growth, and ability to absorb the shocks.
The PMA’s prudent regulatory policies have prevented negative impact on the stability of the banking system. The PMA has carefully made a balance, in order to achieve this, between the interests of all stakeholders and has even moved forward in achieving and fulfilling its tasks and objectives as one of the best-advanced central banks.
In its efforts to combat money laundering and terrorism financing, the PMA, through the Financial Follow-Up Unit, has led national efforts in the National Risk Assessment (NRA), in preparation for Palestine’s evaluation by the Middle East and North Africa Financial Action Task Force (MANAFATF) in 2020.
This resulted in the adoption of the National Strategy to Combat Money Laundering and Terrorism Financing by the Palestinian Cabinet.
Keeping pace with the developments in the financial technology, and providing a sophisticated and secure technological infrastructure for all segments engaged in financial technology, the PMA has begun licensing e-payment services companies, with the aim of developing retail payments and expanding their use through the development of the infrastructure of electronic payment systems and tools in Palestine in a safe, transparent and effective manner.
With respect to the growth of the banking system, the consolidated financial data on July 2019 indicated that customer deposits with banks operating in Palestine amounted to approximately $12.6 billion showing a growth rate of 2.6% compared to $12.3 billion prior to the current financial crisis suffered by the PNA due to Occupation measures (February 2019),. Data also indicate that total credit facilities increased to $9.2 billion compared to $8.5 billion in the same period, with a growth rate of 8%.
In line with international requirements, the PMA has issued detailed instructions to ensure that banks comply with international standards, particularly international standard 9 for financial reporting on financial instruments and financial allocations. The standard provides new classification and measurement requirements. Impairment and hedging accounting oblige banks to hedge and make the necessary allocations against debt based on expectations of a default or delay in repayment.
PMA has also issued instructions regarding the implementation of Basel III requirements by banks, which will take effect as of the first quarter of 2020, so banks operating in Palestine are compliant with the best international standards in the field of strengthening and improving financial positions as to meet potential economic and financial pressures, and improving levels and quality of capital, risk management and liquidity requirements, as well as increased transparency, which will have a positive impact on maintaining financial stability and long-term growth.
As part of achieving and enhancing financial inclusion in Palestine in accordance with the National Financial Inclusion Strategy, which aims to raise the proportion of people receiving appropriate financial services in Palestine from 36% to a minimum of 50% over the next few years, consequently to achieving social welfare and improving living conditions for individuals thus promoting economic growth, the relevant committees have begun to work on the implementation of the strategic plan with the participation of various stakeholder institutions from the public and private sectors.
In the upcoming period, The PMA is also launching the strategy for the specialized lending sector, that was developed in partnership with the World Bank, with the aim to develop and diversify lending services during 2019 to 2023 and increase the proportion of the beneficiaries of these services. The launch of this strategy comes in conjunction with the National Financial Inclusion Strategy with the aim of developing the specialized lending sector and improving corporate governance frameworks and governance practices in order to enable it to increase its services and spread and allow it to provide other financial services such as insurance services, remittances and some other financial services when the appropriate conditions are met.
PMA’s Board of Directors has issued a decision to establish a Supreme Sharia Supervisory Board entrusted with the design and approval of financial products and services of Islamic banks and specialized lending institutions and to explain their provisions and mechanisms of implementation so that they are fully in accordance with the provisions of Islamic sharia and the standards issued by the AAOIFI.
The purpose of this is to enhance confidence in Islamic banking and to ensure that the work of Islamic banks conforms to the provisions of Islamic sharia.
PMA continues its efforts in enhancing the stability, growth, development and soundness of the Palestinian banking system, reducing the risk to the banking system in particular, and the financial system in general, as well as promoting financial inclusion in Palestine, and contributing to supporting the growth and achieving sustainable economic growth.