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Middle East
PA to introduce austerity measures
Cuts by Palestinian Authority follow significant drop in funding from Arab states.
Last Modified: 24 Aug 2010 18:57 GMT
A UN report says the Palestinian Authority 'will face a serious liquidity crisis in September' [Reuters] 

The Palestinian Authority (PA) is to implement a range of austerity measures following a sharp decline in funding from Arab countries.

Saadi al-Kronz, the authority's transport minister, said the cuts include plans to save fuel and maintenance on its fleet of 2,000 vehicles which will be introduced on October 1.

Kronz said that the cuts would restrict the use of government vehicles to working hours and that he would be seeking further savings on fuel and licensing.

Speaking on Monday, the minister said he hoped the measures would save millions of dollars each year and minimise a need to purchase new vehicles at an annual cost of about $10m.

'Liquidity crisis'

Ghassan al-Khatib, a PA spokesman, said the authority planned further spending cuts, but that none would affect the salaries of some 148,000 public employees in the West Bank and Gaza Strip.

Khatib told the Reuters news agency that the Palestinians wished "to save money because of this financial crisis and to keep the path of reform going" and were aiming to reduce dependence on donor aid.

The PA's main Arab donors, Saudi Arabia and the United Arab Emirates (UAE), have contributed considerably less this year than they have annually since 2007.

So far, Saudi Arabia has donated $30.6m up until August, compared to $241.1m in the same period in 2009.

The UAE, which contributed $173.9m in 2009, has yet to offer any aid this year.

A United Nations report last week said the PA "will face a serious liquidity crisis in September and will have difficulty paying August salaries" due to the aid shortfall.

But Palestinian officials have said that wages for August have been secured.

Palestinian policymakers have cited previous donor support as a key factor behind strong economic growth in the West Bank in the last two years, estimated at up to 8 per cent for 2010.

Source:
Agencies
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