"The situation in which we must wait for Israel's prime minister to decide on a monthly basis whether or not money is transferred to us, places us in an impossible situation. If Israel doesn't come to its senses -- we will be in danger of collapsing," the Yedioth Ahronoth newspaper quoted Fayyad as saying.
Fayyad made the statement at a meeting Monday with Israeli parliamentarian Yitzhak Herzog in Ramallah.
Israel said this month it would transfer to the Palestinian Authority $100 million in tax revenue that had been withheld following the upgrade of Palestinian U.N. status. At the time, a source close to Israeli Prime Minister Binyamin Netanyahu said it would be a one-time transfer to ease economic hardship.
Herzog, the first Israeli politician to visit the West Bank city since Israeli elections last month, told Fayyad a scenario leading to the collapse of the Palestinian Authority would be catastrophic, not only for the Palestinians, but Israel as well.
"The significance would be the Israel Defense Forces would have to resume responsibility over West Bank cities," Herzog said.
"The current Palestinian Authority government is the sole political partner amongst the Palestinians, and Israel must make great efforts to reach a negotiation," the newspaper quoted Herzog as saying.
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