Craig added: "It remains a critical priority for the Palestinian Authority (PA) to undertake comprehensive reforms to bring down the deficit to sustainable levels."
Norway also announced on Tuesday it would provide $10 million to a joint aid package to pay the salaries of PA employees.
The Norwegian funds will be used to help pay teachers in February and March. The European Union, Russia and Saudi Arabia are also contributing to the joint aid package, Norway said.
The Palestinian Authority is largely dependent on foreign aid for its $1 billion a year budget, and may fall short of the necessary funding as various donor countries withdraw funding due to the win of the Hamas party in January elections in Palestine. It is unclear how much of that money will be frozen by international donors once Hamas forms a government by the end of this month.
As many as one in four Palestinians depend on wages from the Palestinian Authority.
Hamas won January’s elections but European countries and the US regard it as a terrorist organization. Hamas has been urged by the US and Israel to change its policies towards Israel, including recognizing it and renouncing violence, but the movement rejected these demands. Hamas has, however, abided by the terms of a truce made last February in Egypt, even amidst hundreds of Israeli violations (according to human rights groups) of the truce.
A proposal being discussed by Israel and donor nations would funnel most future international aid to the Palestinians through the World Bank. Expanding the World Bank’s role could enable donors to sidestep the government while ensuring humanitarian assistance gets through to the Palestinian people, sources familiar with the proposal said.