Monday, June 17, 2024

World Bank warns of Palestinian Authority’s financial collapse amid Gaza war

The Palestinian Authority is facing the possibility of financial collapse, the World Bank has warned in a report, as revenue streams run dry and economic activity drops precipitously against the backdrop of the besieged Gaza war.

“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 said 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 was projected to contract between 6.5 and 9.6 percent, although the Bank noted 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 added.

Close to half a million jobs in the Palestinian economy have been lost since October 2023, according to the World Bank.

That includes an estimated loss of 200,000 jobs in Gaza and nearly 150,000 jobs in Israel held by people living in the West Bank.

Poverty has increased and “at present, nearly every Gazan lives in poverty”, the World Bank stated.

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