The Palestinian Authority will pay only half the salaries due to its government employees this month due to a shortfall in funding from donor nations, according to PA Prime Minister Salam Fayyad. Fayyad made the comments during a press conference in the West Bank city of Ramallah on Sunday. ‘The government has decided to pay employees half their salary due to the financial crisis that the Palestinian Authority is experiencing because of the failure of donors, including our Arab brothers, to fulfill their pledges,’ PM Fayyad said.

Fayyad has claimed that a failure in donor nations to supply the PA with promised funding has left it with a $30 million per month shortfall, which has been so far filled through private loans.

‘We tried to deal with the financial crisis by borrowing from banks and we were able to alleviate the problem somewhat by taking out loans, but the deficit that is accumulating from month to month has gotten to the point that can no longer be addressed with bank loans,’ Fayyad stated.

Bassam Zakarnah, head of the Public Service Employees Union, claimed, in an interview with PNN that the crisis is not genuine. Threatening strike action, he said ‘there is no real justification for this crisis since Israel has transferred the tax money which is 150 Million NIS, and an additional 160 million NIS was sent by the EU, so we demand that the government explain the real reason behind the salary cuts’.

The PA relies on a large part of its funding from foreign donations. It also receives Palestinian tax money transferred by Israel. In May PA salaries went unpaid for eight days due to Israel withholding tax revenue in the aftermath of the unity deal between Fatah and Hamas.