The World Bank has warned in a report that the "Palestinian National Authority is facing the risk of a collapse in public finances, with the depletion of revenue flows and a significant decline in economic activity against the backdrop of the war in Gaza." The report stated that "the public financial situation of the Palestinian Authority has deteriorated severely in the past three months, greatly increasing the risk of a financial collapse." It confirmed that "revenue flows have largely dried up due to the sharp decline in the transfers of clearance revenues owed to the Palestinian Authority and the enormous drop in economic activity."
The report predicts "another economic contraction ranging between 6.5% and 9.6%" in public finances as "the scene remains cloudy and uncertainties about the outlook for 2024 continue." The World Bank added that "increasing external aid and accumulating arrears owed to public employees and suppliers are the only available financing options for the Palestinian Authority." The report noted that "the Palestinian economy has lost nearly half a million jobs since October 2023. This includes the loss of an estimated 200,000 jobs in the Gaza Strip, 144,000 jobs in the West Bank, and 148,000 workers crossing the border from the West Bank to the Israeli labor market."
In the coming months, the deficit in the Palestinian Authority is expected to reach $1.2 billion, which would double the financing gap that was $682 million at the end of 2023, bringing it to $1.2 billion.
