The Palestinian Authority is teetering on the brink of financial collapse, according to a report released by the World Bank on Thursday. The dire fiscal situation arises as revenue streams dwindle and economic activities sharply decline amidst the ongoing Gaza conflict.
"The fiscal situation of the Palestinian Authority has dramatically worsened in the last three months, significantly raising the risk of a fiscal collapse," stated the World Bank. The report highlights that the Palestinian Authority's revenue has nearly dried up due to a severe reduction in clearance revenue transfers and a substantial drop in economic activity.
The World Bank forecasts that the Palestinian Authority's deficit will soar to $1.2 billion in the coming months, a significant increase from the $682 million funding gap recorded at the end of 2023. The Palestinian economy is projected to contract by between 6.5 and 9.6 percent, though the bank noted that the economic outlook remains "highly uncertain."
To manage the escalating crisis, the World Bank pointed out that the Palestinian Authority's only available financial options are increased foreign assistance and the accumulation of further arrears to public employees and suppliers.
The current conflict in Gaza escalated following Hamas's unprecedented attack on southern Israel on October 7, 2023, which resulted in over 1,170 Israeli deaths, primarily civilians, and the taking of 252 hostages. Israel's retaliatory offensive has since claimed at least 35,800 lives in Gaza, mainly women and children, according to the Hamas-run health ministry in Gaza.
Violence has also intensified in the West Bank, where the Israeli occupation since 1967 allows for limited Palestinian Authority control. Since the onset of the Gaza conflict, Israeli forces or settlers have killed at least 518 Palestinians in the West Bank, while Palestinian attacks have resulted in the deaths of 12 Israelis, according to an AFP tally of official figures.
The World Bank report also highlights significant job losses, with nearly half a million Palestinian jobs lost since October 2023. This includes an estimated 200,000 job losses in the Gaza Strip and approximately 150,000 jobs in Israel previously held by West Bank residents. The economic downturn has exacerbated poverty levels, with nearly every resident of Gaza now living in poverty.
The World Bank's alarming report underscores the urgent need for international intervention and support to avert a full-scale financial collapse of the Palestinian Authority amidst the continuing conflict and humanitarian crisis.
Comment: