Malaysia pledged on Sunday to donate RM55 million (US$16 million) to the cash-strapped Palestinian Authority after a western aid freeze left its Hamas-led government in financial crisis.

Prime Minister Abdullah Ahmad Badawi made the pledge at a meeting of political and business leaders at the World Economic Conference (WEF) in the Egyptian Red Sea resort of Sharm el-Sheikh.

Abdullah, current chairman of the 57-member Organisation of the Islamic Conference (OIC), said Arab and Islamic countries had a duty to "lighten the load on the Palestinian people who are suffering".

The United States and the European Union, which is the main donor to the Palestinians giving 500 million euros a year, both suspended aid after the radical Islamic group Hamas won elections in January.

Verge of bankruptcy

The boycott has left the Palestinian Authority on the verge of bankruptcy.

However banks have been unwilling to transfer previous donations to the Palestinians because of the boycott by the United States and the EU which consider Hamas a terrorist organisation.

Palestinian leader Mahmud Abbas is due to visit Kuala Lumpur to discuss assistance following an invitation from the Malaysian premier although the date is still to be fixed.