The Palestinian Authority is facing a severe financial crisis due to the failure of donor countries to fulfill their pledges to fund the Palestinians, PA officials in Ramallah said Monday.
The officials told The Jerusalem Post that the PA wouldn't be able to pay July salaries to more than 150,000 public servants and may be forced to close down several government institutions as a result of the deepening crisis.
The officials disclosed that the deficit in the PA budget has risen in the past six months from $1.6 billion to $2b.
"We are facing a real crisis," a top PA official told the Post, adding "we are on the brink of bankruptcy."
Another PA official warned that the financial crisis would undermine the PA and limit its ability to reach a peace agreement with Israel.
"We will lose the support of the Palestinian public if we stop paying salaries to our civil servants and policemen," he said. "This is happening at a time when Hamas is receiving large sums from Iran and radical Islamic groups."
PA Prime Minister Salaam Fayad expressed concern that the PA could face a financial crisis if the donor countries, particularly some Arab states, failed to transfer to the PA treasury the funds they had pledged to donate at the Paris conference.
Fayad described the financial situation of the PA as "difficult," adding that his government was making enormous efforts to provide the necessary money to pay salaries to its employees.
The Palestinian Economic Council for Development and Reconstruction
said Monday that the PA had received only $900m. of the $7.7b. promised during the December 2007 Paris Donors' Conference for supporting the Palestinians.
The money was promised to the PA over a period of three years by nearly 90 countries and international organizations during the Paris conference.
According to PECDAR, the PA was supposed to receive up to $3b. of it during 2008.
However, PA officials complained that that the donors had so far paid less than 35 percent of the promised sum.
The officials said they were particularly disappointed with the majority of the Arab countries for failing to meet their financial commitments toward the Palestinians.
"Most of the Arab countries are now setting conditions for providing us with financial aid," the PA officials said. "Some are saying that they will give us the money only after we end our differences with Hamas, while others are suddenly talking about the need for reforms and transparency in the Palestinian Authority."
The officials pointed out that the Arab countries have given the PA this year about 15% of what they promised. Saudi Arabia, which had pledged at least $500m. over the three-year period, gave the PA less than 20% of the funds.
Kuwait, which pledged $80m. in aid to the PA this year, has yet to fulfill its promise, the officials said. Qatar, which used to provide the PA with more than $200m. annually, stopped channeling the funds after the collapse of the Fatah-Hamas unity government.
Most of the Arab countries have told the PA that they prefer to support vital economic projects in the West Bank and Gaza Strip rather than day-to-day government operations, a move that has drawn sharp criticism from the PA leadership.
"The crisis in the Palestinian territories is likely to aggravate because most of the foreign donors are not living up to their commitments," said Samir Abdullah, the Minister of Planning in the PA government. "The government needs at least 200m. every month, half of which goes to paying salaries."
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