Cash-short Palestinian PM appeals to World Bank

Workers in Gaza say Hamas has been paying salaries on time despite the Western boycott, imposed over Hamas after the Islamist group won 2006 parliamentary elections.

Cash-short Palestinian PM appeals to World Bank
Palestinian Prime Minister Salam Fayyad has appealed to the World Bank to help him secure emergency financing to bridge a shortfall in donor funds and pay public workers, Palestinian and European sources said Tuesday.

Fayyad is seeking a so-called comfort letter from the Washington-based international lending agency to obtain short-term private bank funding, the sources said, speaking on condition of anonymity.

The unusual appeal underscores the extent of the Palestinian Authority's budget crisis despite billions of dollars in aid pledged last year to support a U.S.-backed peace drive.

The Palestinian Authority's workers are due to be paid in the first week of each month. Any delay would be embarrassing for Fayyad's Western-backed government, formed a year ago in the occupied West Bank after Hamas seized control of the Gaza Strip.

Palestinian officials expressed hope that the World Bank would provide the written assurances sought by Fayyad. World Bank officials in the West Bank declined to comment.

Hamas pays Gaza workers

Workers in Gaza say Hamas has been paying salaries on time despite the Western boycott, imposed over Hamas after the Islamist group won 2006 parliamentary elections.

European officials said private banks have started asking for greater assurances before providing loans to Abbas's Palestinian Authority because of the uncertainty over donor funds. Fayyad could face a similar shortfall in future months unless donors pay their commitments on schedule, they added.

Palestinian Planning Minister Samir Abdallah said salary payments may be a few days late. "We have a solid commitment that this serious crisis will be solved soon," Abdallah said, without elaborating.

Palestinian and European sources said Fayyad asked the World Bank on Sunday for the letter to assure private banks that over $80 million in Kuwaiti money deposited in a World Bank trust fund would reach Palestinian Authority coffers by August 15.

Palestinian and Western officials said Kuwait had sent the money to the World Bank trust fund, used to help fund Palestinian Authority operations. But it takes some two weeks for money deposited with the Bank to reach the Palestinian Authority due to the lending agency's oversight procedures.

Donor countries pledged $7.7 billion to the Palestinians at a December conference in Paris aimed at supporting Abbas's peace talks with Israeli Prime Minister Ehud Olmert.

But only a fraction of that money has materialised and most of it has been earmarked for projects, meaning Fayyad cannot use it to pay salaries or meet government expenses.

Abdallah said Fayyad's government, also hit by the dollar's weakness against the Israeli shekel that is used to pay Palestinian salaries, is asking donor countries to convert project financing into direct budget support.

"We cannot continue with our reform plan and economic revival without budget support," he said.


Reuters
Last Mod: 29 Temmuz 2008, 13:01
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