Palestinian Authority faces risk of ‘financial collapse’, says World Bank

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He attributes the situation to the suspension of the delivery of taxes collected by Israel and a “massive decline” in economic activity.

May 24. (EUROPA PRESS) –

The Palestinian Authority faces the possibility of a “financial collapse”, according to the World Bank, which blames the situation on the suspension of transfers of taxes collected by Israel on behalf of the Palestinian authorities and a “massive decline” in economic activity, within the framework of the hostilities unleashed after the attacks perpetrated on October 7 by the Islamic Resistance Movement (Hamas).

The organization has highlighted in a report on the impact that the conflict, marked by more than seven months of Israel’s military offensive against the Gaza Strip, is having on the Palestinian economy, that the situation of the Palestinian Authority has worsened “dramatically” during the last three months, which “increases the risk of a fiscal collapse.

“Income flows have largely dried up due to the drastic reduction in income transfers payable to the Palestinian Authority and a massive drop in economic activity,” he noted, before elaborating that “the widening gap between the income generated and the amount necessary to finance basic public spending is causing a fiscal crisis.”

In this way, he detailed that “the financial deficit reached 682 million dollars (close to 630 million euros) at the end of 2023” and added that “this gap is expected to double in the coming months, reaching 1,200 million dollars (around 1,107 million euros)”.

“The increase in foreign assistance and the accumulation of new arrears to public employees and suppliers are the only financing options available to the Palestinian Authority,” the World Bank said in a statement published on its website.

Likewise, he stressed that “since October 2023, nearly half a million jobs have been lost in the Palestinian economy”, including some 200,000 in Gaza, 144,000 in the West Bank and 148,000 employees residing in the West Bank and East Jerusalem who worked in the market. Israeli labor.

“The overall poverty rate of Palestinians was 32.8 percent in mid-2023”, 3.7 percent more than in 2017, he highlighted, before pointing to “wide differences” between the West Bank and Gaza. Thus, the figure was about 64 percent in the Strip – where “almost all the inhabitants currently live in poverty” – and twelve percent in the West Bank.

The World Bank has also explained that the Gross Domestic Product (GDP) per capita stood at 3,360 dollars (approximately 3,100 euros) in 2023, which represents a drop of twelve percent compared to the previous year, especially in the Strip, where the decrease was 28 percent.

“The per capita income in Gaza was approximately one fifth of that of the West Bank. In 2023, Gaza’s real per capita income was the lowest ever recorded,” the organization stressed, which stressed that “the Palestinian economy continues to suffer.” a massive shock in the first months of 2024.”

“Although the prospects for 2024 remain very uncertain, a new economic contraction of between 6.5 and 9.6 percent is projected,” he stressed, amid international concern about the serious humanitarian crisis in the Strip. Gaza and the increase in insecurity and the worsening living conditions of Palestinians in the West Bank and East Jerusalem.

Israel began an offensive against Gaza in response to the attacks carried out on October 7 by Hamas and other Palestinian militias, which left around 1,200 dead and around 240 kidnapped. Since then, the Gaza authorities, controlled by the Islamist group, have reported 35,900 deaths due to the Israeli offensive, in addition to more than 515 Palestinian deaths in the West Bank and East Jerusalem.