An Israeli government report says the Palestinian Authority is not economically stable enough for statehood.
The report is set to be presented this week to donors to the Palestinian Authority. They include the U.S., the EU, the World Bank and the International Monetary Fund.
The report says Palestinian "financial stability is now challenged." It cited a shortfall of foreign aid and lack of development in the private sector.
Last year the IMF said Palestinian financial institutions were ready for statehood.
Palestinian spokesman Ghassan Khatib rejected the Israeli report, citing statements by the IMF and others. "As Palestinians we are ready for statehood," he said. "Our institutions are ready."
Donors have given billions of dollars to the Palestinians since 1993.