July 2, 2012
PA says it’s facing ‘worst financial crisis’
The Palestinian Authority is facing its “worst financial crisis” yet, according to a PA official, because of a foreign aid shortfall and the rejection of a $100 million loan by the International Monetary Fund.
Unless the PA finds a way to close its budget gap, PA Labor Minister Ahmed Majdalani said, the delay in aid from Arab donor nations will render the PA unable to pay its employees’ July salaries and its debts to private businesses, according to the French news agency AFP.
In an attempt to help ease the PA’s budget problems, Israel recently asked the IMF for a bridge loan of $100 million on the PA’s behalf. The IMF denied the request, saying it did not want to set a precedent of one state receiving a loan on behalf of a non-state body, Haaretz reported.
PA Prime Minister Salam Fayyad and Bank of Israel Governor Stanley Fischer, both former IMF officials, had decided that Israel would ask for the bridge loan because the Palestinian Authority is not a member state and cannot receive financial support from the fund.
Al-Arabiya reported that a delay in salary payments would be particularly sensitive now with the Muslim fasting month of Ramadan beginning in mid-July.