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Sunday, July 03, 2011

PA facing financial crisis. But insists it is ready for statehood!

From Bloomberg:
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.

Today is a day of crisis,” Fayyad said at a press conference today in the West Bank city of Ramallah. He said the Palestinian Authority had a deficit of $585 million and had reached the limit of its bank borrowing.

Fayyad said the financial crisis “shouldn’t mean anything for the readiness for a Palestinian state.” Palestinian Authority President Mahmoud Abbas has said he plans to ask the United Nations to recognize a Palestinian state in September.

The World Bank said in an April report that the Palestinian Authority had increased bank borrowing to fund development projects for which designated aid hadn’t been received and that arrears were accumulating at an unsustainable rate. At the end of 2010 total domestic debt was about $840 million, “which may be close to the PA’s borrowing limits,” the report said.

Donor countries have paid only $330 million of the $971 million pledged this year, Fayyad said. Roughly one-quarter of the authority’s $3.7 billion budget comes from foreign aid.

Oman, Algeria and the United Arab Emirates are the only Arab countries that have so far paid funds that they pledged for this year, Fayyad said, adding that the U.S. and European Union have been making regular contributions.

It's been nearly a year since Fayyad declared that the PA would be "financially independent" by the end of 2013. I'm sure this is all going according to plan.

The World Bank report from earlier this year warned about this crisis, but the report buried this information on page 12 in its overly rosy view of the future of the PA and how ready it was for statehood.

Notice also how it is always the Arabs who don't pay their commitments to the PA. But don't be to hard on them - they are very good at shipping burial shrouds to Gaza.

(h/t NormanF)