The Palestinian Economic Capacity to Handle Foreign Public Debts

Abstract

The main goal of the present research is to assess the financial deficit

of the Palestinian general budget and the burden of the Palestinian foreign

public debts. The research also seeks to examine the tolerance efficiency of

the Palestinian economy in dealing and holding the burden of its foreign

public debts. The Keynesian mathematical model has been used to derive the

functional relationship between the budget deficit and the public debt, the

same model has also been adopted to derive the gap between the domestic

savings gap and the exports gap.

In order to meet the hypothesis of the present research and to assess

the efficiency of the Palestinian economy toward its external public debt,

a number of economic indicators which are commonly known and used by

economists have been adopted.

The main results of the analysis show a low efficiency of the Palestinian

economy in terms of exports of goods and services. Foreign Currency Reserves

indicate a low efficiency in dealing with the burden of external public debt,

while indicators such as outstanding debt ratio to GDP, average interest

rate and the structure and time period of the external debt show a stronger

efficiency to both the Palestinian economy and the Palestinian national

authority to meet the burden of the external debt.