From the Liveblog of
Friday, May 24, 2024
World Bank warns Palestinian Authority facing risk of financial collapse
The Palestinian Authority is facing the possibility of financial collapse, the World Bank says in a new report, as revenue streams run dry and economic activity drops precipitously against the backdrop of the war in Gaza.
“The fiscal situation of the Palestinian Authority has dramatically worsened in the last three months, significantly raising the risk of a fiscal collapse,” the World Bank says in a statement.
“Revenue streams have largely dried up due to the drastic reduction in clearance revenue transfers payable to the Palestinian Authority and a massive drop in economic activity.”
In the coming months, the authority’s deficit is expected to reach $1.2 billion, doubling the funding gap of $682 million at the end of 2023.
The Palestinian economy is projected to contract between 6.5 and 9.6 percent, although the Bank notes that the outlook remains “highly uncertain.”
“Increased foreign assistance and the accumulation of further arrears to public employees and suppliers are the only available financing options for the Palestinian Authority,” the World Bank says.
The report comes days after Finance Minister Bezalel Smotrich threatened to cut off the transfer of funds to the Palestinian Authority in Ramallah after the announcement by Norway, Spain and Ireland that they will unilaterally recognize a Palestinian state.
The far-right minister also said he will not extend the indemnity given to Israeli banks that transfer funds to banks in the West Bank, which is due to expire on July 1.
