RAMALLAH, West Bank (Reuters) - Saudi Arabia will give the Palestinian Authority $100 million to help alleviate a stinging budget crunch, the Palestinian prime minister’s office said on Sunday.
News of the cash was welcomed by Palestinian officials in the Israeli-occupied West Bank, as salaries for public sector employees have yet to be paid in full this month and economic doldrums promised to mar the usually festive and spendthrift Ramadan holiday beginning next week.
The transfer, described by Palestinian officials as imminent, will only partially defray the Authority’s (PA) some $300 million in expenditures this month. But officials in Ramallah are seeking the support of yet more countries to patch a budget deficit projected at over $1 billion for 2012.
“This $100 million is important and significant because it’s coming from a leading Arab state, and this hopefully can be an example for other countries to follow,” Ghassan Khatib, a government spokesman, told Reuters.
“We will remain in need of external funding. Whenever it is affected, then we will be in crisis,” he said.
Amid a downturn in productive sectors and with its economic and commercial prospects hamstrung by Israeli restrictions, the PA is deeply dependent on foreign aid to pay its bills.
Of a hoped-for $1.1 billion in donor funds in 2011, the Western-backed Authority in Ramallah received just under $750 million.
Several factors coalesced last year to leave the Palestinians out of pocket: a global financial downturn, a freeze in Israeli-managed customs duty as West Bank officials sought unity with militant Islamist rivals in Gaza and an aid freeze by the United States following Palestinians’ abortive bid for statehood at the United Nations last fall.
But with Saudi Arabia’s aid offer, Palestinians may hope for an end to the shortfall in pledges by traditional Arab benefactors, wrought in part by attention to domestic unrest and spending during the Arab Spring last year.
Providing the PA with $200 million at the height of its maneuvering for recognition at the UN last September, Saudi Arabia is a key financial fallback for the Authority, whose officials have been keen to express their gratitude.
“This generosity added to the track record of financial and political support by the Kingdom, represented by the custodian of the Two Holy Shrines (King Abdullah),” Palestinian Prime Minister Salam Fayyad said in a statement on Sunday.
“This support will have a deep impact in deepening the steadfastness of the Palestinian people,” he added.
Reporting By Noah Browning; Editing by Susan Fenton