August 8, 2008 / 8:07 AM / 10 years ago

Israel to allow bank notes into Gaza - Palestinians

GAZA, Aug 8 (Reuters) - Israel will allow banks to transfer 72 million shekels ($20 million) into the Hamas-controlled Gaza Strip to ease a shortage of bank notes, Palestinian officials said on Friday.

The cash infusion will replenish reserves used to pay this week’s salaries of Palestinian President Mahmoud Abbas’s Palestinian Authority workforce. The workers receive their salaries by withdrawing cash from bank tellers and machines.

Officials initially said Gaza banks did not have enough cash for all the withdrawals, but by borrowing among themselves they managed to pay the salaries without a cash transfer.

A senior official from the Palestine Monetary Authority said the new shipment of bank notes would arrive in Gaza on Monday and be used to resupply the banks after this week’s payday.

Peter Lerner, the spokesman for Israel’s coordinator of activities in the Palestinian territories, said he was checking the report.

Israel tightened its cordon on the Gaza Strip after Hamas Islamists routed Fatah forces loyal to Abbas and seized the coastal territory more than a year ago.

Israel allowed a small shipment of shekels into the Gaza Strip last week to replace worn-out bills, Palestinian officials said. Large shipments take place several times a year.

Many Arab states have not met their financial commitments to the Palestinian Authority, creating a budget crisis that has cast doubt on its ability to cover monthly expenses. (Reporting by Mohammed Assadi; Editing by Alistair Lyon)

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