Arab states have offered the Palestinian Authority a $100 million monthly "financial safety net" to aid Palestinian government tackle an economic crisis after the United Nations granted de facto statehood to Palestine.
Reacting to the UN approval to Palestine as “non-member state” Israel has ordered to build 3,000 Jewish settler homes in the occupied West Bank and announced it would arrest payments of customs duties it collects on behalf of the Palestinians to pay an outstanding electricity bill.
The crisis situation Palestinian economy is aggravating due to lack of foreign funding and Israel inhibitions on development. Palestine is facing a budget deficit of $1.5 billion for 2012, with donor funds expected to fulfill only $1.14 billion of this shortage.
The Palestinian Authority (PA) administers limited self-rule in the West Bank and gets most of its aid from the USA, the European Union and Arab states. But reduction in aid from Arab states over past some years has resulted in the PA being unable to pay salaries to its 153,000 civil servants on time on several occasions.