RAMALLAH, April 22 (JMCC) - The Palestinian Authority is in serious financial crisis, officials say.

Donor funds promised at a Sharm el-Sheikh conference in early March have failed to materialize, according to planning minister Samir Abdullah. Not a single pledge has been met of the $4.4 billion promised for Gaza reconstruction and support for the Palestinian Authority.

Abdullah says the government is $300 million deeper in debt after paying compensation to families who experienced property losses and injuries in Israel's war in Gaza early this year.

In Paris in 2007, donor countries pledged $7.7 billion over three years. Abdullah says that less than one-fourth of these funds have made their way into Palestinian coffers.

Half of the government's $3.3 billion budget comes from donor funds, while the other half is collected through tax revenues. Fifty percent of expenses are incurred through salary payments to 120,000 public sector employees.

While the Palestinian government is largely limited to the West Bank after Hamas forces took over security installations in Gaza in June 2007, it continues to pay salaries to Gaza employees.

Arab countries like Qatar, Kuwait, Algeria and Bahrain decreased their funding because of the internal Palestinian conflict, explains Birzeit university professor Nasser Abdel Karim. Arab states are divided in their loyalties, with some supporting Hamas and others supporting the Fateh-dominated Palestinian Authority.

As a result, donor funding to the government in the West Bank by Arab countries has dropped by thirty percent over the last year. In 2008, Arab countries met half of their financial committments to support the Palestinian government headed by Mahmoud Abbas.

Western governments are additionally preoccupied with their own budget crises and questioning the transparency of the West Bank government and its limited authority.

Now the Palestinian Authority faces an extremely serious financial crisis, a senior official told the Palestinian daily al-Quds.

President Mahmoud Abbas is currently in the United Arab Emirates seeking funding to pay public sector salaries for the month of April.