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Sunday Oct. 24, 2010 6:09 PM (EST+7)
Saudi Arabia pledges $100 million to curb massive PA budget deficit

Read more: Saudi Arabia, Palestinian Authority, Palestinian Authority budget, PA budget, donor aid

RAMALLAH, Oct. 24 (Reuters) - A pledge of $100 million from Saudi Arabia and other international aid is easing the Palestinian Authority's (PA) financial crisis, Palestinian Prime Minister Salam Fayyad said on Sunday.

The PA is relying on help from foreign backers to plug a budget deficit projected at $1.2 billion for 2010. The slow arrival of funds, especially from Arab states, has forced Fayyad to take austerity measures.

At a September 20 donors' meeting in New York, Fayyad said the PA needed $500 million to meet its funding shortfall for the year. Speaking to Reuters on Sunday, he said there had recently been progress, including a $40 million World Bank grant.

Saudi Arabia told the PA on Sunday that it was about to transfer $100 million in addition to other commitments it had made to the PA treasury, Fayyad added.

Slow disbursal of funds pledged by Arab states has been the main cause of the financial squeeze. No explanation has been given for the payment delays.

Gulf oil exporters Saudi Arabia and the United Arab Emirates have been the PA's main Arab backers in recent years, according to official figures seen by Reuters in August. The figures showed that, as of August, payments from those states in 2010 had been well below previous years.

Donor support has been one of the main drivers of economic growth in the Palestinian territories. Real economic growth in the West Bank and the Gaza Strip is forecast at 8 percent in 2010, compared with 6.8 percent in 2009, according to the International Monetary Fund.

Salaries paid to around 150,000 PA employees are a major support for the economy. They include some 67,000 people in the Gaza Strip, where the PA has continued to pay wages to people it employed when the Hamas group seized control in 2007.






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