Ramallah: The Prime Minister of the Palestinian Authority, Dr Salam Fayyad, and the European Union Representative, Christian Berger, on Wednesday, signed a €41.4 million (Dh152.05 million) financing agreement, which will help to cover the expenses of the Palestinian Authority until the end of 2010.

These funds will cover the Palestinian Authority's salaries and pensions through PEGASE, the European mechanism for support of the Palestinians. 

The European Union's financial support of the group is designed both to help sustain the public services offered by the PA and to strengthen the institutions of the future Palestinian state.

The €41.4 million financing package will contribute to the payment of civil servants' salaries and pensions, both in Gaza and the Occupied West Bank, for November and December 2010. These funds complement a €158.5 million expense package, signed earlier this year.

Dr Fayyad pointed out that the European agreement, issued last December, is an effective basis on which to build an image abroad, in which the political process is viewed in a credible light and which guarantees the end of occupation and the establishment of the state. He added:  “that forms a key to security and peace in the region and a vital interest to its people”.

He said the Palestinian Authority is working at being self sufficient in this regard. It has already successfully reduced the budget deficit from $1.8 billion dollars in 2008 to $1.2 billion in 2010.

Dr Fayyad also pointed out that today’s agreement is a response from the EU to the PA’s appeal at a New York donor conference last September and said: “We have additionally received the amount of $40 million from the World Bank, and the Saudi grant of $100 million. We are expecting more grants from other international donors especially from the United States. These grants help in dealing with our financial hardships. However, the PA still needs more to close the financial deficit”.