World Bank warns Palestinian Authority faces financial collapse
Ramallah says it needs $4.5b financial package to avoid collapse while Israel mulls reducing tax transfers
By LAHAV HARKOV MAY 23, 2024 12:50 PM
The World Bank warned Monday that the Palestinian Authority is facing the risk of financial collapse as its revenue continues to decline while its spending continues to rise.
“The financial situation of the Palestinian Authority (PA) has continued to deteriorate over the past year. Its fiscal deficit has widened, its public debt has increased, and its international reserves have fallen,” the World Bank said in a statement.
“The PA is currently facing a very difficult situation. Its budget deficit is projected to widen further in 2024, and its debt-to-GDP ratio is expected to exceed 100%,” the statement added.
The PA has blamed the decline in its revenues on a number of factors, including the Israeli-Palestinian conflict and the international community’s unwillingness to provide sufficient financial assistance.
“The international community must take urgent action to help the PA avoid financial collapse,” the World Bank said. “This could include providing financial assistance, supporting economic reforms, and promoting peace and stability in the region.”
The warning from the World Bank comes as the PA is facing a possible reduction in tax transfers from Israel. The Israeli government has been considering reducing the amount of tax revenue it transfers to the PA in response to the PA’s decision to join the International Criminal Court.
If Israel does reduce the tax transfers, it would further worsen the PA’s financial situation and could make it even more difficult for the PA to avoid financial collapse.
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