WASHINGTON DC, Friday, May 24, 2024 (WAFA) — The Palestinian Authority is facing the risk of financial collapse, the World Bank says in a new report, as revenue streams run dry and economic activity drops significantly against the backdrop of the Israeli aggression on Gaza.

"The fiscal situation of the Palestinian Authority has dramatically worsened in the last three months, significantly raising the risk of a fiscal collapse," the World Bank says in a statement.

"Revenue streams have largely dried up due to the drastic reduction in clearance revenue transfers payable to the Palestinian Authority and a massive drop in economic activity," the report adds.

In the coming months, the Authority's deficit is expected to reach $1.2 billion, doubling the funding gap of $682 million at the end of 2023.

"Increased foreign assistance and the accumulation of further arrears to public employees and suppliers are the only available financing options for the Palestinian Authority," the World Bank says.

The report comes days after ultranationalist Israeli Finance Minister Bezalel Smotrich threatened to cut off the transfer of funds to the Palestinian Authority after the announcement by Norway, Spain and Ireland that they will unilaterally recognize a Palestinian state.

The far-right minister also said he will not extend the indemnity given to Israeli banks that transfer funds to banks in the West Bank, which is due to expire on July 1.

M.N