Palestinian officials said on Tuesday that the lack of Arab donations to the Palestinian National Authority (PNA) this year might lead to a severe financial crisis in the upcoming months.
Palestinian Labor Minister Ahmed Majdalani told Xinhua that Arab states have only paid 20 percent of what they have pledged to give in aid to the PNA.
"Our Arab brothers are cutting off the financial supports when our European friends are honoring their pledges to financially boost the PNA," he said.
Majdalani denied that the western-backed PNA, which relies on international aid to meet its needs, is now suffering from a financial crisis, affirming that the situation is still under control so far.
"The situations is in hand till now, but it might worsen in the upcoming months if the Arabs will continue not to send funds to support the PNA's budget," he added.
The Palestinian cabinet, led by the U.S.-backed, former World Bank official, Salam Fayyad, urged donor countries, during its weekly meeting on Monday, to swiftly transfer cash to cover the deficit in its general budget.
The cabinet said that foreign aid payments were not enough to cover the budget deficit during the first half of 2010 compared to the total fund needed for the whole year.
The cabinet also stressed the necessity to take all the measures needed to prepare the 2011 budget to achieve the main objective of the government's medium-term financial policy not to depend on foreign donations to back the government's running costs.
The Palestinian government approved in March a 3.9 billion U.S. dollar budget for 2010.
The 2010 budget allocates resources for the expenses of development, estimated at 670 million dollars, an increase of 67 percent compared to last year.
Around 50 percent of the budget was directed to the Gaza Strip, which is ruled by the Islamic Hamas movement since 2007.
Meanwhile, Majdlani said this year's budget is distinguished as 65 percent of its running costs are covered by the PNA's inland revenues.
However, economists believe that the improvement of the PNA's domestic revenue and the increase of its returns will not halt it from asking for international financial support since its takings do not exceed 40 percent of the general budget.
The PNA is facing a severe budget deficit of 1.2 billion U.S. dollars for this year, and mainly depends on donor countries to cover it.
PNA Minister of Economy Hassan Abu Lebda said the Arab states withhold to pay for the Palestinian cabinet's budget will negatively affect its ability to meet its commitments internally.
"Many donors did not pay for us at all this year, especially donors in the Arab region," he told Xinhua, adding "what we have received from all the donor countries was only enough to cover up the first quarter of the year."
The Palestinian ministry of finance refrains from telling the amount of money it has received from donor countries this year. However, last year's payments were estimated at 1.35 billion U.S. dollars.
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