|Palestinian Prime Minister Salam Fayyad speaks during PADICO's issuance of bonds. [Reuters]
A Palestinian investment firm has issued the Palestinian territories’ first corporate bonds in an effort to strengthen local economy.
PADICO, a publicly traded company that focuses on investment in the Palestinian economy, announced on Tuesday that it is issuing 7,000 five-year bonds which are worth $70m.
"We are taking the long view on things and hope to raise money through our corporate bonds to finance additional long-term investments; that is our vision and that is our strategy for Palestine," Munib Masri, the PADICO chairman who is a former geologist-turned billionaire, said in a statement released on Tuesday.
Palestinian Prime Minister Salam Fayyad lauded the bond issue, calling it "a happy and important occasion and a significant step".
Palestinian authorities expressed hope that the bonds will boost its private sector, so as to diversify its financing options.
"We are hopeful that other competent and solid companies in Palestine will follow suit and issue financial instruments that will augment the variety of financial intermediation tools in Palestine, and will also improve our credit standing as a financial market," Maher al-Masri, the chairman of the Palestine Capital Markets Authority told Reuters news agency.
Issuing of the corporate bonds comes amid growing financial hardships for Palestinians, who have been subjected to an Israeli freeze on monthly transfer of funds.
Israel is withholding the transfer of revenue, collected on Palestinian goods which pass through its ports and airports, to the Palestinian Authority (PA) to express its displeasure over a reconciliation deal reached between the rival Hamas and Fatah factions last month.
Israel is opposed to the deal, saying it cannot recognise any Palestinian government that includes Hamas.
Hamas does not recognise the Jewish state and has long called for its destruction.
Inspite of the international pressure over the tax revenue freeze, the Israeli finance minister said the decision to delay transfer of $86m for 10 days is not as harsh a measure.
"The delay in transferring funds is a yellow card for the PA after the signing of the agreement with Hamas," Yuval Steinitz said on public radio on Wednesday.
"Until now, it is a delay of a week to 10 days, but it could become a red card," he said, explaining that Israel would decide what to do depending on "clarifications" from the Palestinians.
Israel refused to hand over the governing PA’s money in 2006 after Hamas won the parliamentary elections. Then, people didn’t receive their salaries for six months.
The tax returns make up two-thirds of the PA's annual budget, excluding foreign aid.
Al Jazeera’s Nicole Johnston, reporting from Gaza, said the Israeli freeze is starting to squeeze the Palestinian public’s lifeline – their paychecks.
Ahraf al-Sourani, an English teacher at a school in Gaza, has not received his monthly paycheck of $600 yet.
"I’m responsible for one big family. I have four children, my wife, my parents," he said.
"We’ve got different obligations, upcoming cheques and loans," Mujahed Hamayel, a PA employee, said.
"Not getting paid is a serious problem."
Source: Al Jazeera and agencies