Qatar has agreed to provide $150 million in debt relief to the Palestinian Authority, U.S. Secretary of State John Kerry said in Paris after talks with Qatari Foreign Minister Khaled al-Attiyah.
The donor-dependent Palestinian Authority, which exercises limited self rule in the Israeli-occupied West Bank, faces mounting debt as Western and Gulf aid has dwindled.
Kerry has led efforts to resume long-dormant peace talks, but many Israelis and Palestinians - as well as independent experts - are sceptical about the chances of reaching a peace deal in their decades-old conflict.
The United States is seeking to broker an agreement in which Israel would exist peacefully alongside a new Palestinian state created in the West Bank and the Gaza Strip, lands captured by the Israelis in a 1967 war.
Welcoming Qatar's move, Kerry said he expected other Arab countries would follow in its steps although no economic package could be a substitute for political efforts to seek peace.
"I'm confident that other Arab governments are currently evaluating and making their decisions and there will be others that join in this initiative as we go forward," Kerry said.