(MENAFN - Arab News) The Palestinian self-rule government is close to being "completely incapacitated," largely because Arab countries haven't delivered hundreds of millions of dollars in promised aid, the Palestinian prime minister said in an interview yesterday.
If allowed to continue, the Palestinian Authority's unprecedented financial crisis will quickly double the number of Palestinian poor to 50 percent of a population of roughly 4 million, Salam Fayad told The Associated Press.
Fayad said his budget deficit has widened in recent years, blaming Arab states that broke aid promises.
"The financing problem that we've had ... in the last few years is solely due to some Arab donors not fulfilling their pledge of support in accordance with Arab League resolutions," Fayad said.
European countries kept all their aid commitments and the US honored most, with the exception of 200 million held up by Congress last year, he added.
Fayad's heftiest monthly budget item is the government payroll. He said he managed to pay half the November salaries by getting another bank loan, using as collateral a promise by the Arab League to cover whatever money Israel might withhold. The money from the Arab states never came, and Fayad said he couldn't pay the rest of the November salaries, let alone December wages.
The Palestinian Authority already owes local banks more than 1.3 billion and can't get more loans. It also owes hundreds of millions of dollars to private suppliers, and some have stopped doing business with the government.
Meanwhile, the Palestinian president has ordered his government to officially change the name of the Palestinian Authority to "State of Palestine."
The move follows the November decision by the UN to upgrade the Palestinians' status to that of a "nonmember observer state."
President Mahmoud Abbas said yesterday that all official Palestinian stamps, stationery and documents will now bear the new name.