Palestinian Authority Prime Minister Salam Fayyad said his government has only enough money to pay half of salaries this month and appealed to “donors and our Arab brothers” to fulfill their pledges for funding.
Donors' failure to deliver pledged funds has left the PA with a $30 million shortfall that covers only about a third of the government's costs and a $585 million deficit. The PA has tried to make up the shortfall by borrowing from banks, "but the deficit that is accumulating from month to month has gotten to the point that it can no longer be addressed with bank loans," Fayyad said.
"Donor countries have only paid $330 million of the $971 million pledged for this year," Fayyad said. Approximately one quarter of the PA's $3.7 billion budget comes from foreign aid.
Oman, Algeria, and the United Arab Emirates are the only Arab countries that have paid so far.
The US and European Union have been making regular contributions.
Earlier this month, Israel halted the payments temporarily in response to a reconciliation deal between theparty, which dominates the Palestinian Authority, and rival Islamist group , which runs Gaza.
The move, which violates international accords signed by Israel, provoked international criticism and Israel agreed shortly afterwards to resume the funds transfers.
Finally, the financial crisis “shouldn’t mean anything for the readiness for a Palestinian state.” Palestinian Authorityhas said he plans to ask the United Nations to recognize a Palestinian state in September, Fayyad said.