Bank loans 'to pay PA salaries'

http://news.bbc.co.uk/go/rss/-/1/hi/world/middle_east/7893509.stm

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The Palestinian Authority (PA) is to use bank loans to pay civil servants' overdue salaries from January, it says.

Funds from "local banks" were granted after the PA received international aid pledges it said would repay the loans.

The PA pays more than $120m (£84m) a month to around 165,000 civil servants and is heavily dependent on aid.

Civil servants held a strike on Sunday against delays of their January salary payments, after the PA diverted the funds to aid the Gaza relief effort.

Around 1,300 Palestinians - including 400 children - were estimated to have been killed in Israel's recent 22-day assault on the coastal enclave, along with 13 Israelis.

Some 5,000 Palestinians were injured and more than 4,000 Gazan homes were destroyed, along with many roads, bridges and government buildings.

Reconstruction costs are estimated at more than $2bn, and the PA diverted January's salary funds to compensate Gazans whose homes were destroyed.

Palestinian Social Affairs Minister Mahmoud al-Habbash said the overdue salaries would be paid on Tuesday.

"We received financial assistance from local banks and we hope that financial aid from donors will be transferred soon to pay back the loans," he told Reuters news agency.

More than half of Palestinian civil servants are based in the Gaza Strip, which has been run by the Islamist militant group Hamas since June 2007.

Palestinian Authority President Mahmoud Abbas has described the financial situation of the Palestinian Authority as "very difficult".