Bounced checks is a very dangerous and unhealthy phenomenon that leads to slowing down economy growth and investment decline. Non-payment on time deepens the economic crisis.
Consequently, failing to honor checks on time causes confusion in cash flows and makes check-holders unable to fulfill their obligations.
Palestine witnessed a sharp increase in the volume of bounced checks during 2020 due to the Coronavirus.
According to data issued by the Palestinian Monetary Authority, bounced checks volume during 2020 amounted to about $1.632 billion. In, 2019 the number was at about $1.277 billion.
Bounced checks rose 22% in Palestine, at the time it’s about 15% of all checks submitted, which amounted to $10.3 billion in 2020.
The highest percentage
The highest percentage of bounced checks recorded in 2020 was in April. The number amounted to about $366 million out of the $981 million presented for clearance. This is a rate of 37% of the total checks submitted.
This coincided with the declaration of emergency and the critical authority’s cessation of classifying bounced checks.
The total number of bounced checks in Palestine during 2020 was about 1,182,949,. the number rose from 836,972 in 2019 – a rise of about 30%.
In the Gaza Strip, the disastrous economic conditions, such lack of liquidity and purchasing power caused a sharp rise in the volume of bounced checks.
The number of bounced checks has risen in the Gaza Strip in recent years negatively affecting capital turnover movement. It caused not only great confusion in all economic activities, but also traders to lose confidence in the banking and judiciary systems for their inability to curb this phenomenon. Traders also lost confidence in in dealing with checks and their low circulation in Gazan markets.
The number of bounced checks in Gaza reached about 21,000 during 2020, with a worth of about $75.8 million. This is 4.6% of the total bounced checks in Palestine during the same year.
This is compared to about $65 million in total bounced checks during 2019 – an increase of about 14% over 2020.