The World Bank has warned that the Palestinian Authority may cease to function if government employees are left without salaries for much longer.
The European Union and US have both frozen aid payments to the Authority since Hamas took power, over its refusal to renounce the use of violence or accept Israel's right to exist.
Israel has also stopped handing over customs duties that it used to collect on behalf of the Authority, worth around E48m a month.
A report by the World Bank last month had warned that the Palestinian economy would experience a dramatic decline but the new survey said that 'these projections now appear too rosy'.
Institutional breakdown could undermine years of good work in a matter of weeks and prove extremely hard to rectify, it added.
