Economic development is a key component of Middle East peace, and the still-weak Palestinian economy needs foreign financial aid to ensure that political reforms can take hold, the head of the International Monetary Fund said on Monday. One day before an international meeting in London on Palestinian reform, IMF Managing Director Rodrigo de Rato said the Palestinian economy was at a "critical juncture" in the wake of a severe recession which spread poverty and drained public finances. "The fiscal situation of the Palestinian National Authority is precarious and highly dependent on external budget support," Rato said in a statement released in Washington. "The fund sees a need for substantial external budget support in the short term to allow the Palestinian National Authority to continue to function and to play its role in the peace process," he said. "Underpinning political support for the reform process through external budget support is essential." --More 2359 Local Time 2059 GMT
