Mohammed Assadi
August 23, 2010 - 12:00am

The Palestinian Authority said on Monday it would implement measures to save on fuel and maintenance for its fleet of 2,000 vehicles, as part of spending cuts spurred by a decline in funding from Arab countries.

Transport Minister Saadi al-Kronz told Reuters the cuts taking effect on Oct. 1 would restrict the use of government vehicles to working hours, and seek efficiency measures for further savings on fuel and licensing.

Kronz hoped the measures would save millions of dollars each year and minimise a need to purchase new vehicles at an annual cost of about $10 million.

Government spokesman Ghassan al-Khatib said the Palestinian government planned further spending cuts, but that none would affect the salaries of some 148,000 public employees in the West Bank and Gaza Strip.

Khatib told Reuters the Palestinians wished "to save money because of this financial crisis and to keep the path of reform going" and were aiming to reduce dependence on donor aid.

The Palestinian Authority's main Arab donors, Saudi Arabia and the United Arab Emirates, have contributed considerably less this year than they have annually since 2007.

So far the Saudis have donated $30.6 million until August, compared to $241.1 million in the same period in 2009. The United Arab Emirates, which contributed $173.9 million in 2009, has yet to offer any aid this year.

A United Nations report last week said the Palestinian Authority "will face a serious liquidity crisis in September and will have difficulty paying August salaries" due to the aid shortfall. But Palestinian officials have said that wages for August have been secured.

Palestinian policymakers have cited donor support as a key factor behind strong economic growth in the West Bank in the last two years, estimated at up to 8 percent for 2010.


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