Palestine Monetary Authority

PALESTINE MONETARY AUTHORITY

---

Instructions No. (8) of 2021

Regarding the Sustainability Fund to Provide Financing for Economic Sectors

Based on the provisions of Legislative Decree No. (9) of 2010 concerning Banks, particularly Articles 40 and 72 thereof,

and with the aim of mitigating the economic impacts of the coronavirus (COVID-19) pandemic on economic activities and projects, especially small and medium-sized enterprises, and to enable various economic sectors to survive, continue, and contribute positively to the development process,

and to encourage economic growth,

and in accordance with the powers delegated to us,

and in the public interest,

we have issued the following instructions:

---

Article (1)

Definitions

The Fund: The Sustainability Fund established pursuant to Article (3) of these Instructions.

Micro-enterprises: Projects and enterprises with fewer than (4) employees, and whose sales rate does not exceed $100,000.

Very small enterprises: Projects and enterprises with between (5 to 9) employees, and whose sales rate does not exceed $200,000.

Small enterprises: Projects and enterprises with between (10 to 19) employees, and whose sales rate does not exceed $500,000.

---

Article (2)

Scope of Application

The provisions of these Instructions shall apply to all banks licensed by the Palestine Monetary Authority to conduct banking business in Palestine, including Islamic banks.

---

Article (3)

Establishment of the Sustainability Fund

The Palestine Monetary Authority adopts these Instructions to establish a permanent fund named the "Sustainability Fund" aimed at providing financing for various economic sectors and enabling economic projects to recover from the impacts of the economic crisis caused by the coronavirus, and to encourage economic growth in alignment with the government's economic policies, which include supporting youth and entrepreneurs, empowering women, investing in the social economy, productive economic sectors, and integration into the digital economy.

The Palestine Monetary Authority seeks to mobilize funds from local and external sources to encourage economic growth through a number of programs.

As outlined in these Instructions.

---

Article (4)

Objectives of the Sustainability Fund

The Palestine Monetary Authority aims through the Sustainability Fund to achieve the following:

1. Encourage economic growth by directing credit to economic sectors to achieve sustainable growth.
2. Provide financing for various economic sectors to increase production, particularly in agriculture and renewable energy.
3. Provide targeted financing for projects and enterprises affected by the coronavirus crisis.
4. Provide financing for projects and enterprises to cover emergency operational expenses, support working capital, and finance assets.
5. Provide financing and sustain micro and small projects and enterprises to enable them to continue operations.
6. Enable economic projects and enterprises to create new job opportunities and preserve existing employment.

---

Article (5)

Healthcare Sector Financing Program

The program aims to provide financing for projects and companies operating in the healthcare sector to achieve the following:

1. Emergency response to confront the coronavirus, slow down COVID-19 infection rates, and limit its spread.
2. Enhance the capacity of medical centers to treat patients and virus-infected individuals, including related equipment.
3. Strengthen comprehensive healthcare services and clinical capabilities dedicated to combating the coronavirus.
4. Support essential treatment supplies such as ventilators, blood oxygen monitors, and other equipment and supplies for treating coronavirus cases, and finance medications to prevent stockouts.
5. Develop systems for assessing and controlling pandemic risks, including continuous monitoring and providing means for sample collection and testing.
6. Provide diagnostic equipment in care centers, laboratory systems, diagnostic systems, testing tools, and other equipment and materials necessary for tests related to infectious diseases and their monitoring.
7. Implement and apply preventive strategies that include intervention measures to address chronic infectious diseases.
8. Secure hospital supplies for waste management, electricity, and water services, and engage medical specialists and platelet supplies.
9. Any other services aimed at developing the healthcare sector.

---

Article (6)

E-Learning Sector Financing Program

The program aims to provide financing for projects and companies operating in the e-learning sector to achieve the following:

1. Enhance synchronous e-learning capabilities as an alternative to traditional education methods and strengthen the utilization of technological advancements.
2. Improve instructional design services and the preparation of educational materials and content with high efficiency.

---

Article (7)

Digital Transformation Financing Program

The program aims to provide financing for projects and companies operating in the digital transformation sector to achieve the following:

1. Develop capabilities in digitalization to select, analyze, manage, or create digital products or services.
2. Provide various digital services to reduce obstacles caused by physical barriers, simplify supply and value chains, and enable rapid delivery of goods and services.
3. Leverage technology to solve complex problems and develop innovative mechanisms and ideas that contribute to economic development.
4. Encourage the adoption of technological advancements in the financial services market, including advanced technologies such as artificial intelligence.
5. Provide an attractive and inclusive digital investment environment aligned with sustainable development goals.
6. Invest in digital transformation and attract technology, technical expertise, and jobs to the local market.
7. Invest in digital communication through applications, boards, and digital tools.
8. Invest in e-commerce digitalization and infrastructure to facilitate the digital transformation process in e-commerce.
9. Any other services aimed at developing digital transformation.

---

Article (8)

Recovery and Growth Encouragement Program

The Palestine Monetary Authority, through the program, seeks to provide financing for projects and production sectors and assist them in recovering from the crisis impacts.

And encourage growth through the following:

1. Maintain the sustainability of projects and businesses directly affected by the coronavirus (COVID-19) crisis operating in tourism, agriculture, industry, services, information technology, renewable energy, retail sales, and other projects that enhance the production role and provide job opportunities.
2. Establish new projects, particularly those led by female and male entrepreneurs and experts, and encourage the creation of new companies and the building of production chains.
3. Expand the production base by increasing and developing production lines, automating processes, and raising efficiency and quality levels.
4. Establish new projects and invest in renewable energy, agriculture, manufacturing, and waste recycling.
5. Establish and increase job opportunities in services and invest in software and information technology.

---

Article (9)

Micro-Project Financing Program

The program aims to provide financing for micro-projects to achieve the following:

1. Introduce new products and services.
2. Assist in creating production chains.
3. Enhance the resilience of artisans and craftsmen and preserve their production.
4. Provide new job opportunities for youth, women, and interested groups, and contribute to combating and fighting poverty.
5. Enable micro-projects and enterprises to continue in the production cycle and preserve job opportunities.
6. Develop women-owned projects and create gender-responsive products and projects, establishing specific outlets for women.

---

Article (10)

Specialized Lending Institutions Financing Program

The program aims to provide financing to specialized lending institutions to enable them to finance very small and small projects.

Small, as follows:

1. Lending institutions wishing to benefit from this program shall submit an application to the bank along with an implementation plan and target categories.

2. The bank shall verify the adequacy of the plan, its compliance with these Instructions, and its achievement of the desired objectives.

3. The bank shall make a lending decision and notify the lending institution and the Palestine Monetary Authority, and the pricing conditions stipulated in these Instructions shall apply to the loan.

4. The bank shall be committed to verifying that the specialized lending institution utilizes the financing and re-lends it to the target projects stipulated in these Instructions.

5. The bank must include the following in loan agreements with specialized lending institutions:

   a. Commitment to use the financing to fund the target projects stipulated in these Instructions.

   b. Commitment to re-lend the loan to target projects at an interest rate not exceeding 9% reducing.

   c. Commitment not to modify or change the interest rates on financings granted from the Sustainability Fund throughout the financing period.

   d. Commitment not to charge any commissions on certificates granted pursuant to these Instructions.

   e. The lending institution may apply its pricing policy to non-amortized loans and charge late payment interest on installments due to the debtor at a maximum of 2%, provided this is included in the loan contract.

---

Article (11)

Program Duration

1. The duration for granting financing for the programs shall be a maximum of four years (48 months), including a grace period, starting from the date of the loan or financing.
2. The required financing for target categories shall be implemented and repaid within a maximum of (4) years, including the grace period.
3. Subject to paragraph (2) of this Article, the bank may grant the borrower a grace period of a maximum of 12 months.
4. The borrower may repay the financing before its original due date, in which case the bank may calculate an early repayment commission as stipulated in the relevant Instructions.

---

Article (12)

Financing Program Implementation Mechanism

Financing programs shall be implemented according to the following procedures and conditions:

First: Implementation of financing for the micro-projects and enterprises financing program:

1. The micro-projects financing program shall be implemented through the following banks: Bank of Palestine, Al-Quds Bank, Cairo Amman Bank, Arab Islamic Bank, and Palestinian Islamic Bank.

2. The bank designated for the program shall receive applications and grant loans according to the following conditions:

   a. The borrower must be at least 22 years old.

   b. The applicant must be the owner of the project or own at least 51% of it, and manage it personally for at least one year.

   c. The project must employ no more than 4 workers.

   d. The project must be registered with an official authority, institution, or association, or possess a tax file.

   e. The borrower/project must provide proof of using the loan for the purposes it was obtained for.

   f. The project must generate a monthly income from the project or other family activities sufficient to cover the monthly loan installment.

   g. The borrower/project must have outstanding installments.

   h. The borrower must have a relationship with the bank.

   i. The project must be from projects producing tobacco and cigarettes, gambling, casinos, and similar.

   j. The loan value must exceed the amount of $10,000 (ten thousand dollars) under any circumstances.

3. The bank shall submit a monthly report to the Palestine Monetary Authority on granted loans according to the form attached to these Instructions.

4. The bank shall be committed to not charging any profits on loans provided to projects under this program.

Second: Implementation of financing for other programs besides the micro-projects financing program:

A. Amounts less than $100,000 USD:

1. The bank must receive applications for financing directly from customers.
2. The bank shall conduct the credit study and analysis directly for beneficiaries.
3. The bank shall verify the purpose of the requested financing and its alignment with the objectives of these Instructions.

B. Amounts exceeding $100,000 USD:

1. The bank must receive applications for financing for the programs specified in Articles (5 to 10) of these Instructions from its date.
2. The bank shall conduct the credit study for target categories and projects, and must consider prevailing economic conditions and their impact on project cash flows, and thus avoid over-collecting guarantees.
3. The bank shall submit an application to the Palestine Monetary Authority for financing for projects meeting the conditions stipulated in these Instructions according to the attached form.
4. The Palestine Monetary Authority shall notify the bank of its decision on privatization within a period not exceeding (5) five working days from the date of completing the application.
5. The Palestine Monetary Authority shall transfer the financing value for approved projects to the bank's account within (3) three working days from the date of submitting the application to the bank.
6. Financing payments (installments) shall be deducted from the bank's account with the Palestine Monetary Authority at the end of each month, taking into account the grace period granted to projects.

---

Article (13)

Conditions for Benefiting from Financing

The bank must provide financing to the target economic sectors within the Palestine Monetary Authority's instructions, observing the following:

1. The borrower must be Palestinian, and the financing must be used exclusively in Palestine.
2. The financing must contribute to creating job opportunities and aim to preserve them.

---

Ramallah & Al-Bireh Governorate - Palestine P.O. Box 452
info@pma.ps | Fax: +970 2 2415310 | Tel: +970 2 2415251
Gaza - Palestine P.O. Box 4026
Fax: +970 8 2844487 | Tel: +970 8 2825713
www.pma.ps