DONATIONS TO P.A. DRYING UP

Donor Countries Balk at Additional Support for PA - Lior Greenbaum (Globes)
A $950 million deficit is expected in the PA 2006 budget following the refusal of donor countries to donate additional budget support. The refusal is mostly motivated by anger over the PA's violations of its commitments to the international community not to increase salaries in the public sector. [ED. I.E., THE DONORS APPEAR UNTROUBLED THAT THE MONEY THEY DONATE IS USED FOR TERROR]. The resignation of PA Minister of Finance Salam Fayyad also contributed to the lack of confidence. Foreign aid to the PA totaled $240 million in the first half of 2005, and may not exceed $480 million for all of 2005, compared with expectations of $900 million. The PA continues to draw up its budget on the basis of unrealistic estimates of donations.

See also PA Faces Cash Crunch (Al-Jazeera-Qatar)
The PA has turned to Arab countries for help after European donors froze their funding. But with the exception of Saudi Arabia, Arab countries have largely failed to keep their financial pledges to the Palestinians, sending only about one-third of the promised assistance last year. About $60 million in money reserved for Palestinian salaries has been frozen, said Nigel Roberts, the World Bank's director for the West Bank and Gaza Strip. "The PA's commitment to maintain a salary containment plan was breached in a major way in the second half of the year," he said. The spending levels are "completely unsustainable over time," he said.