Abbas, on visit to Saudi Arabia, seeks urgent financial aid amid PA’s grave economic crisis

Palestinian Authority President Mahmoud Abbas met with King Abdullah in the Red Sea city of Jeddah in Saudi Arabia Friday, and asked the leader for urgent financial assistance.

His meeting with the king comes amid the PA’s grave financial crisis. Abbas told Abdullah that the PA would not be able to pay its employees as Ramadan approaches. He cited large debts and the failure of donors to provide financial aid as the two main reasons for the PA’s fiscal issues.

The PA’s debts have risen to $1.5 billion. Palestinian Prime Minister Salam Fayyad had said some $500 million would be necessary to fix its fiscal situation.

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PA Labor Minister Ahmad Majdalani had called the PA’s financial situation its worst economic crisis since its founding in 1994, AFP reported. Its economic straits have prevented it from paying a portion of government employees’ salaries for the month of June. The payments are usually made by the seventh of the following month, Ma’an News reported.

“What is available to the Palestinian Authority at the moment in terms of funds is not enough to pay government employee salaries this month, with Ramadan approaching… It is not sufficient to pay the bills that the Palestinian Authority owes to private companies,” he said.

The PA will also send letters and official delegations to other Arab countries to seek aid.

The International Monetary Fund recently refused an Israeli request for $1 billion in bridge loan funding for the Palestinians. The PA cannot ask the IMF for money on its own because it isn’t a state.

Israel made the request following a meeting between Fayyad and Bank of Israel Governor Stanley Fischer. According to Haaretz, Fayyad told Fischer that the PA was in dire straits due to nonpayment by Arab countries of funds they had promised. The global financial crisis was, moreover, impeding any increases in aid packages from the US or Europe.

The IMF rejected Israel’s request, saying it did not want to set a precedent of non-state entities receiving loans by proxy.

After speaking with King Abdullah, Abbas met with met with former Lebanese prime minister Saad al-Hariri. The two discussed regional stability, the Israeli-Palestinian peace process, and Jewish settlements in the West Bank, Ma’an News reported.