The World Bank has strongly supported the recognition of an independent Palestinian state following the backing by the International Monetary Fund (IMF).
In a Thursday report, the World Bank compared core Palestinian institutions favorably with those in established countries.
The Palestinian Authority (PA) announced that it intends to work on the recognition of an independent Palestinian state at the UN General Assembly this September.
More than 100 countries have so far officially recognized Palestine as a state based on the 1967 borders, boundaries that existed before Israel captured East al-Quds (Jerusalem), the West Bank, and the Gaza Strip.
The World Bank listed some Palestinian achievements, notably in health and education, but said poverty was a problem.
The poverty rate in the West Bank fell to 16 percent in 2009 from 23 percent in 2004, while the rate in Gaza increased to 33 percent from 30 percent, with 71 percent of Gazans relying on some form of social assistance.
"The PA faces challenges familiar to many in an existing state and like these states, it must navigate and reconcile varying stakeholders in both the West Bank and Gaza," the report said.
"The PA’s performance to date, however, bodes well for the future," it added.
On Tuesday, the IMF reported that the Palestinian Authority’s financial institutions are ready for statehood now that they have carried out a series of economic reforms.