The Palestinian Authority has had to cut salaries paid to its civil servants by half as it faces a major budget shortfall.Prime Minister Salam Fayyad called on "donors and our Arab brothers" to come to their aid, saying that international donors - notably Arab countries - had failed to deliver promised funding.
Donors had provided only $330m of a total $970 commitment for the year.
The authority has been relying on bank loans to tide it over until now.
However, in a recent report the World Bank noted that Palestinian borrowing was "unsustainable" - it was nearing its borrowing limit."Today is a day of crisis," said the prime minister in Ramallah on Sunday.
Foreign donations account for just over a quarter of the total Palestinian budget of $3.7bn.