The World Bank said on Wednesday that it is withholding the December payment to the Palestinian Authority from a multi-donor reform fund because the P.A did not fulfill its reform goals.  In its statement, the World Bank declared that the P.A budget “has become increasingly unsustainable" because of uncontrolled spending, especially due to what the World Bank described as “sharp increases in salaries and hiring”.

The decision of the World Bank comes at a time when half the Palestinian population is living in poverty, with unemployment on the rise and   many “employed” Palestinians living on an average of $2 a day.
Meanwhile, Israel froze the monthly tax payments on Wednesday to the cash-strapped P.A, one week after Hamas won the legislative elections.  Israel collects the customs revenue on behalf of the P.A: this money is used to pay the salaries of some 140,000 government workers.
 Mazen Sonnoqrot, the Palestinian Economy Minister, slammed the Israeli decision and described it as illegal, and a collective punishment to the Palestinians since it  affects as many as 1 million residents. Ismail Haniyya, one of Hamas’ leaders, told Reuters that this decision is an attack against the Palestinian rights. 
Meanwhile, a senior Palestinian government official said that Saudi Arabia and Qatar pledged on Wednesday to transfer $33 million to the Palestinian Authority to ease the severe budget crisis. According to the official, Saudi Arabia promised $20 million and Qatar pledged $13 million in immediate aid to help the Palestinian Authority pay January’s salaries to its 137,000 employees. The official spoke on condition of anonymity.
Hamas dispatched a delegation on a tour to several Arab countries to urge them keep the funding flowing to the P.A. Sami Abu Zuhri, one of Hamas’ leaders in Gaza said on Wednesday that the tour aims to clarify the movement’s position based on its election agenda and press the Arab countries to keep the funding and financial aid to the Palestinians.
 Omar Suleiman, Egyptian intelligence chief, said on Wednesday after talks between the Palestinian President, Mahmoud Abbas, and the Egyptian president Hosni Mobarak, that he believes that Iran will fill the gap. Ahmad Abu Al Gheit, Egyptian Foreign Minister, urged Israel to free all Palestinian tax money: he was speaking  Wednesday during a joint  press conference with the Israeli foreign Minister, Tzipi Livni.
These developments come as the United States and the European Union are threatening to cut off future funding to the P.A if Hamas which won the Palestinian legislative elections, does not reject violent and recognize Israel. The Hamas movement urges foreign donors to resume aid although that it can find alternative sources of funding in the Arab world.
The P.A proposes bringing in an outside auditor or a foreign government to monitor the use of aid money.