IMF urges urgent fund for Palestine
The International Monetary Fund yesterday urged donors to meet their aid pledges to the Palestinian Authority, warning that unless funding was forthcoming it would be forced to cut public wages and social benefits to address a deepening fiscal crisis.
The IMF said the aid-dependent Palestinian economy had entered a "difficult phase" with a severe liquidity crunch worsening since last year due to a drop in aid from Western backers and wealthy Gulf states and Israeli restrictions on trade.
An IMF report released yesterday, prepared for a donor meeting on Palestinian aid in Brussels next week, estimated a financing gap of about $500 million. The Palestinian authority is relying on donor aid to cover its 2012 budget deficit projected to reach $1.1 billion.
Most Palestinian aid comes from the United States, the European Union and Arab nations, allowing the Palestinian Authority to pay the salaries of public workers and benefits.
But the United States, which is trying to restart Israeli-Palestinian peace talks, cut off funding last year when Palestinian President Mahmoud Abbas defied calls from Washington and made a unilateral bid for statehood recognition at the United Nations.
Palestinian officials say more than $150 million of US aid is frozen.
The IMF said just $800 million of $1 billion in promised budget support was disbursed in 2011. In addition, development aid was only $169 million compared with $370 million committed by donors.