The Palestinian Authority (PA) is facing a financial shortfall. According to Salam Fayyad at a press conference in the West Bank, "The government has decided to pay employees half their salary due to the financial crisis the Palestinian Authority is experiencing because of the failure of donors, including our Arab brothers, to fulfill their pledges."
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.