The World Bank released a report on Thursday highlighting a critical fiscal situation for the Palestinian Authority, with potential financial collapse on the horizon as its revenue streams diminish and economic activities plummet, exacerbated by the ongoing conflict in Gaza.
According to the World Bank, the fiscal condition of the Palestinian Authority has severely deteriorated over the past three months, elevating the risk of fiscal failure. “Revenue streams have largely dried up due to a significant reduction in clearance revenue transfers to the Palestinian Authority coupled with a sharp decline in economic activity,” the Bank stated.
The report forecasts that the authority’s deficit could reach $1.2 billion in the upcoming months, effectively doubling the funding gap from $682 million at the end of 2023. The Palestinian economy is expected to shrink by 6.5 to 9.6 percent, though predictions remain highly uncertain.
The World Bank outlined that the only viable financial strategies for the Palestinian Authority are increased foreign aid or accruing more arrears to public employees and suppliers.
The economic downturn has resulted in the loss of approximately half a million jobs since October 2023, with about 200,000 in the Gaza Strip and nearly 150,000 in Israel, affecting West Bank residents. Poverty levels have surged, and currently, almost every resident of Gaza is living in poverty, as per the World Bank’s findings.
