Israel sought a $1 billion IMF bridging loan for the Palestinian Authority earlier this year, but was turned down, an Israeli newspaper said Monday in a report confirmed to AFP by a seniorIsraeli official.
Haaretz reported that Israel's central bank chief Stanley Fischerapproached the International Monetary Fund for the money after discussing the Palestinian Authority's financial crisis with Palestinian prime minister Salam Fayyad.
Sometime after the IMF's annual conference in mid-April, Fischer asked the body for the loan, which Israel would have taken on the Palestinians' behalf.
Israel would then have transferred the money to the Palestinian Authority (PA) headed by president Mahmud Abbas, which would have repaid the money to the Israeli government.
Israel would have remained responsible for repaying the loan to the IMF, under the deal, but the institution eventually declined to make the loan available.
Haaretz said it turned the proposal down because it feared setting a precedent of making IMF money available to non-state entities, like the Palestinian Authority, which as a non-state cannot directly request or receive IMF funding.
A senior Israeli official who spoke to AFP on condition of anonymity confirmed that the details contained in the Haaretz report were accurate.
The Palestinian Authority in the West Bank has been suffering a financial crisis for at least the past year, as pledged funds from Arab nations have failed to materialise, leaving the government unable to pay wages and bills.
While Israel has at times contributed to the crisis, Palestinian officials say, by suspending the transfer of tax and tariff revenues it collects on behalf of the PA, it is also eager to avoid the security deterioration that could accompany a financial collapse of the government in the West Bank.
Israeli Prime Minister Benjamin Netanyahu "is interested in preventing a situation whereby the PA collapses financially, which is liable to have a very negative impact on the West Bank security situation," an Israeli official told Haaretz.
On Sunday, Palestinian Authority labour minister Ahmed Majdalani told AFP that the West Bank authority faced its worst financial crisis since it was founded in 1994.
And he said the government would be unable to pay salaries for the month of July, when the Muslim fasting month of Ramadan begins, unless urgent action was taken to secure funds.