Shortage of cash in Gaza threatens salaries

RAMALLAH, West Bank (Reuters) - Banks in the Gaza Strip face a currency shortage that could prevent Palestinian Authority workers from receiving their salaries in the coastal enclave, Palestinian and Western officials said on Tuesday.

Palestinian Prime Minister Salam Fayyad plans to pay salaries to public workers on Thursday, but the officials said Israel has yet to allow the banks to bring 100 million Israeli shekels ($28 million) into the Gaza Strip for payday.

Palestinian Authority workers in the Gaza Strip get their salaries by withdrawing cash from bank teller machines. Without a cash infusion, officials say, banks in the territory may not have enough shekels to cover workers' withdrawals.

Israel allowed a small shipment of shekels into the Gaza Strip last week to replace bills that were worn out, the officials said.

Large shipments take place several times a year.

Palestinian and Western officials said the United States and the European Union have intervened with Israel, seeking approval to allow the shekels into the Gaza Strip.

Palestinian officials say Israel has yet to say whether it will allow the cash into the Gaza Strip in time. Israeli officials had no immediate comment.

Many Arab states have not met their financial commitments to the Palestinian Authority, creating a budget crisis that has cast doubt on the ability of Fayyad's Western-backed government to cover monthly expenses.

In a statement on Monday, Fayyad said his government has received $42 million from the United Arab Emirates and was working to complete procedures to obtain another $80 million from Kuwait.

(Reporting by Mohammed Assadi in Ramallah; Editing by Dominic Evans)