In the past decade, the PalestinianAuthority (PA) has worked to strengthen economic governanceand combat corruption, both essential to sustained economicgrowth and improved delivery of public services. This reportfinds the PA has made significant progress in its publicinstitutions, establishing a strong governance environmentin many critical areas. But it also identifies areas wherereforms are underway but incomplete or, in some areas, notyet under consideration. Major reforms have been put inplace to strengthen the PA's public financialmanagement (PFM) systems and better manage its equityholdings, two crucial components in the public financesector. In other important areas, such as publicprocurement, public sector employment, regulation of theprivate sector, and the work of anti-corruptioninstitutions, reforms are underway but have not been fullyimplemented. This analysis relies on an understanding of therelationship between good economic governance, publicservice delivery, and corruption. Studies show a directcorrelation between weak governance systems and the qualityof public service delivery. Weak governance systems, inturn, provide an opportunity for corruption. The report doesnot attempt to investigate specific corruption activities orquantify the economic costs of corruption in West Bank andGaza. Its purpose is to provide a comprehensive look at thecurrent state of economic governance in the PA. It is thefirst report to comprehensively assess governance reforms,ascertain citizens' and officials' actualexperiences with corruption in the delivery of publicservices, identify institutional strengths, and highlightsystematic governance weaknesses which could lead to corruption.
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