Cash intended to help Palestinian Authority alleviate its ongoing financial crisis
Algeria transferred this week US$26m to the Palestinian Authority to help alleviate its ongoing financial crisis, an Arab League official said.
The North African country deposited the money with the Palestinians on January 1, the state-run Palestinian news agency WAFA reported, citing deputy Arab League secretary-general Ahmed Ben Helli.
Arab League Secretary-General Nabil Elaraby has sent letters to Arab governments to speed up US$100m of monthly payments to the Palestinians that was agreed on at an earlier summit in Baghdad, WAFA cited Helli as saying.
The US$100m in assistance represents the equivalent amount of Palestinian tax revenues that should come through Israel, which the Jewish state has withheld after the authority successfully applied to become a non-member state of the United Nations.
The Palestinian Authority has been struggling with a fiscal crunch since mid-2012 and been unable to pay employees' salaries.
Economic growth in the West Bank and Gaza Strip was projected to slow to between 5 and 8 percent last year, from about 10 percent in 2011, as the Palestinian Authority, faced with its biggest-ever financial crisis, was unable to pay the salaries of thousands of its civil servants because donor countries did not to honour their pledges accordingly, Palestinian Finance Minister Nabil Kassis earlier said in an interview with Arabian Business.
The authority’s projected fiscal deficit has widened to US$1.3bn as a result of a shortfall in expected revenues and donor Arab and international countries not honouring their commitments on time. That left a gap of about US$500m for the Palestinian Authority to pay bank loans the governing body had to take out to cover employee salaries. The salaries of 160,000 civil servants account for more than half of the authority's budget.
The Palestinian economy has been marred by high unemployment, continued financing gaps, growing debt and heavy dependence on donor aid and bank borrowing.