The Western-backed government of Palestinian President Mahmoud Abbas estimates that it will need at least $1.62 billion in donor assistance per year to close its soaring budget gap, the World Bank said.
In a bleak report to donors obtained by Reuters on Tuesday, the international lending agency said local revenues were not enough to sustain the government's wage bill and that there was little chance of improvement as long as Israel refused to lift restrictions on Palestinian travel and trade.
The World Bank said 94 percent of the foreign aid needed by the Palestinian Authority would be used to cover recurring expenditures, including salaries, utility bills and social payments, leaving little money to fund development.
The World Bank report was prepared for next week's meeting of the Ad Hoc Liaison Committee, a major Palestinian donors' group. The meeting, which will lay the groundwork for a donors' conference in December, is part of a US-led effort to bolster Abbas and the government he appointed in the occupied West Bank following Hamas's takeover of the Gaza Strip in June.
Western diplomats said Abbas's government, led by Prime Minister Salam Fayyad, would be able to cover this year's budget gap by using foreign aid and frozen tax revenues recently released by Israel.
But the diplomats questioned Fayyad's ability to cover a fiscal hole estimated at $1.6 billion per year in the absence of a political breakthrough that will revive the Palestinian economy and bring in larger amounts of Arab aid.
"It's huge and we don't see how the Palestinian Authority can finance it," said one diplomat who monitors its funds.
Last Mod: 18 Eylül 2007, 17:42