Donors' Palestinian budget aid short of target

PARIS (Reuters) - An international conference this week that raised billions of dollars for the Palestinian government failed to yield the hoped-for amount of budget aid, figures released by host France show.

The 87 countries and international organizations that met in Paris on Monday pledged $7.4 billion in aid to the Western-backed government of President Mahmoud Abbas to boost the moribund Palestinian economy.

That is more than the $5.6 billion over three years that Palestinian Prime Minister Salam Fayyad had asked for.

But figures released by the French Foreign Ministry on Wednesday showed the biggest item in his request, budget aid, did not receive as much as he had hoped.

Fayyad had asked for $3.9 billion in budget aid to cover running costs, such as civil servants' salaries, and the foreign ministry said only $1.54 billion of the funds pledged were in the form of budget aid.

However, another $2.23 billion had yet to be broken down in terms of what it would fund.

Donor countries pledged $2.07 billion in aid for projects, which was more than the $1.7 billion asked for, the Foreign Ministry figures showed. There was also $996 million in humanitarian aid and $644 million in "other aid".

Monday's one-day conference was the financial sequel to last month's Annapolis meeting that launched the first Israeli-Palestinian peace talks in seven years.

Abbas and Israeli Prime Minister Ehud Olmert agreed at Annapolis to try to reach a deal on a Palestinian state by the end of 2008.

(Reporting by Francois Murphy; editing by Robert Woodward)