Ma'an News Agency
July 27, 2011 - 12:00am

CAIRO (AFP) - Palestinian prime minister Salam Fayyad said Tuesday that the Palestinian Authority needed $300 million "urgently" to help ease a financial crisis.

The PA "urgently needs $300 million to overcome the bottleneck and deal with the financial crisis," he told reporters in Cairo after an extraordinary meeting of Arab League representatives.

The crisis stems from the fact that pledged aid has not yet come through.

Fayyad said the PA had received $331 million in 2011, including $79 million from Arab countries, as well as an additional $30 million from Saudi Arabia.

Arab countries had agreed that aid to the PA should amount to $330 million every six months.

Ahead of Tuesday's meeting, Palestinian Authority Foreign Minister Riyad Al-Malki told AFP that the meeting at the Arab League's Cairo headquarters had been convened at the request of President Mahmoud Abbas.

Abbas had called Arab League chief Nabil Al-Arabi on Monday night to request the meeting as the PA faces the possibility of being unable to pay the salaries of its employees, Al-Malki said.

"The importance of the meeting is that it has become urgent that the Arab countries meet their financial obligations, particularly given the looming possibility that the Palestinian Authority will be unable to pay salaries for this current month and the next one, which is Ramadan," he said.

Abbas dispatched Fayyad to present the meeting with details of the funding crisis crippling the West Bank government, largely because pledged aid has not materialised, officials say.

Earlier this month, Fayyad said PA staff would receive only half-pay until the promised funds arrived.

"The government has decided to pay employees half their salary due to the financial crisis that the Palestinian Authority is experiencing because of the failure of donors, including our Arab brothers, to fulfil their pledges," he said.

"If this crisis continues, the government will have to take additional austerity measures," he said, warning that without receipt of the pledged aid, employees would continue to receive half-pay.

The donors' failure to deliver pledged funding had left the PA with a monthly shortfall of $30 million, Fayyad said, adding that the aid received so far only covered around a third of government costs.

In late May, Fayyad said the PA was not receiving aid quickly enough to meet its spending needs and pointed the finger at Arab nations, without naming specific culprits.

The PA is largely reliant on foreign donors to make up its yearly budget. It also receives tax and tariff revenue that is collected by Israel and delivered periodically.

In May, Israel halted the payments temporarily in response to a unity deal between the Fatah party, which dominates the PA, and Hamas, which runs the Gaza Strip.

The move, which violated international accords signed by Israel, provoked international criticism, and Israel agreed shortly afterwards to resume the fund transfers.


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