Palestinian President Mahmoud Abbas on Saturday swore in a new government headed by a loyalist from his dominant Fatah party, a move rejected by his Islamist rival Hamas as a blow to unity efforts.

Mohammed Shtayyeh, an economist and longtime Abbas adviser, will serve as prime minister of the West Bank-based Palestinian Authority (PA). Foreign Minister Riyad al-Maliki and Finance Minister Shukri Bishara will continue in their positions.

Shtayyeh was named Palestinian prime minister on March 10, replacing the independent university president Rami Al-Hamdallah. He will run the ministries of interior and religious affairs until new appointees are named for the two posts.

The rival Hamas group that runs Gaza called the move blow to unity efforts that faltered since the two groups signed a new reconciliation deal in Cairo in October 2017, but disputes over power-sharing had blocked the implementation of the agreement.

"This is a separatist government, it has no national legitimacy and it will reinforce the chances of severing the West Bank from Gaza," said a statement issued by Hamas as the swearing ceremony in Ramallah, in the Israeli-occupied West Bank ended.

Two factions of Abbas's Palestine Liberation Organization (PLO) refused to take part in Shtayyeh's government.

Shtayyeh's immediate challenge is to shore up the cash-strapped PA, which exercises limited self-rule under interim peace accords with Israel.

The PA has been squeezed by steep U.S. aid cuts, with the crisis exacerbated by a dispute with Israel over the withholding of some 5 percent of the monthly tax revenues it transfers to the Authority.