A new UN report lauds Palestinian Authority state-building achievements but warns of a widening gap between institutional progress and a stagnant political process.

Prepared by the office of the UN special coordinator for the Middle East peace process, the report follows previous UN assessments that the PA’s state-building progress is on track to deliver the goals it set out to achieve.

"The PA has completed what it set out to achieve two years ago to prepare its institutions to be able to assume the responsibilities of statehood," the report, released on Wednesday, states.

"This is a considerable achievement which should be recognized, preserved, and built upon."

However, the report also warns that these achievements may not be sustainable in the absence of far-reaching political progress, according to a summary presented by Robert Serry, the special coordinator.

"I am very worried about the disconnect between what the PA has achieved on the ground, and where the political process stands. The reality is that there is only so much that can be done in conditions of prolonged occupation, unresolved final status issues, no serious progress on a two state solution, and a continuing Palestinian divide," Serry said.

"Further achievements in state-building require that the politics catch up with the impressive progress on the ground. People should realize that if we do not meet this challenge, the achievements the Palestinian Authority has realized will be increasingly at risk."

On Monday, a report by the World Bank said the Palestinian Authority had made "substantial progress" toward implementing a two-year plan to build state institutions.

In the report prepared to be presented to the Palestinians' international donors, the World Bank said public institutions now compared "favorably to other countries in the region and beyond".

The report added, however, that a protracted fiscal crisis risks undermining the state-building achievements over the past years.

It also said that Israeli restrictions on the Palestinian economy must be lifted to allow sustained growth.