World Bank headquarters
World Bank headquartersiStock

The World Bank warned on Tuesday that the Palestinian Authority’s (PA) economy faces a "bleak" outlook, particularly pointing out Israel’s restrictions on Palestinian Arabs, reports the AFP news agency.

In a new report, the global lender commended efforts by the PA to slim its public wage bill but said the economies of the Gaza Strip and PA-assigned areas of Judea and Samaria remain heavily dependent on foreign donor support and hindered by Israeli restrictions.

Israeli-imposed "restrictions on movement and access in the West Bank and the restrictions resulting in near-blockade in Gaza remain among the most important obstacles to growth and private sector development in the Palestinian territories," the report said, according to AFP.

"If not eased or lifted, the Palestinian economy is expected to continue operating well below its potential," it added.

The Israeli government has in the past decided to offset the tax money it collects on behalf of the PA because of the monthly financial aid it provides to families of terrorists.

PA officials have remained defiant and have made clear that the PA will never cease paying terrorists' salaries.

The PA spends six percent of its annual budget to pay $4.5 million a month to jailed terrorists and another $6.5 million to their families, yet continues to ask for foreign donations.

The World Bank report warned that "decisions by the newly elected Israeli government to double the monthly deductions from clearance revenues... could signal a discouraging trend going forward."

Overall unemployment across Gaza and Judea and Samaria stood at 24.4 percent, it added.

Outside "sources of risks, such as in the areas of food and energy prices, mean the overall economic outlook remains bleak", Stefan Emblad, the World Bank's country director for the Palestinian territories, said in the report.