PA faces 'worst funds crisis since founding': Minister

AFP , Sunday 1 Jul 2012

West Bank-based Palestinian Authority is facing 'worst financial crisis' since its founding in 1994 due to aid shortfalls from Arab donors, warns Palestinian labour minister

West Bank
Palestinian workers wait for Israeli soldiers to open the gate of a separation barrier between the Jewish settlement of Modiin Elite and the West Bank village of Harbeta to return home after the day's work in Israel. (Photo: AP)

The Palestinian Authority government in the West Bank is facing its "worst financial crisis" since its 1994 establishment, the Palestinian labour minister told AFP on Sunday.

Ahmed Majdalani warned that a shortfall in the delivery of aid from Arab donor nations means the PA will be unable to pay employees their July salaries or pay off debts it owes to private businesses across the West Bank.

"It is the worst financial crisis experienced by the Palestinian Authority since its founding," he told AFP.

"What is available to the Palestinian Authority at the moment in terms of funds is not enough to pay government employee salaries this month, with Ramadan approaching," he said.

"It is not sufficient to pay the bills that the Palestinian Authority owes to private companies."

The Palestinian Authority has frequently warned it faces a massive financial shortfall that threatens its ability to pay thousands of government employees on time, or even at all.

A delay in salary payments would be particularly sensitive this month, as the Muslim fasting month of Ramadan begins in mid-July. Muslims often break their daily fast at large communal meals, stocking up ahead of time on plenty of food.

Last July, Palestinian prime minister Salam Fayyad said the government would pay workers half-salaries because it faced a shortfall of hundreds of millions of dollars.

He attended a special meeting of the Arab League to urge Arab donor nations to make good on aid pledges.

The executive committee of the Palestine Liberation Organisation also warned on Saturday of the dire funding situation facing the West Bank government.

"The executive committee calls on all the brotherly Arab nations to contribute to the solution of the urgent financial crisis that the national authority faces," it said.

"The continuation of this crisis will threaten both the Authority's short and long-term development and the stability of its institutions," the committee warned.

"The current financial situation is worse than any previous circumstances and requires rapid intervention," it added.

"The Authority is currently unable, with Ramadan about to start, to pay salaries and other financial entitlements that are both necessary and urgent."

The Palestinian Authority government headed by Fayyad is expected to meet on Tuesday to discuss the crisis and chart a path forward.

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