BETHLEHEM (Ma'an) -- The Palestinian Authority's financial crisis is not over, a Palestinian official warned Saturday, despite the release of US funds worth nearly $500 million

"The Palestinian government will hold a special meeting Sunday to approve the public budget after the US administration decided to unblock financial aid to the Palestinians," PA minister of labor Ahmad Majdalani told Ma'an.

"Only $200 million of the $480 million from the United States will go to the treasury, and the rest will be go to USAID-funded projects."

A shortfall in foreign donor funding in 2012 means that the PA is still facing a budget deficit.

Donor countries pledged $1.3 billion in 2012 but only transferred $800 million in funds, adding a $500 million deficit to the 2013 budget, which it is estimated at around $3.6 billion, Majdalani said.

The PA has allegedly borrowed $1.38 billion from Palestinian banks and is indebted to the private sector, the minister said.

Palestinian economist and lecturer at Birzeit university Naser Abdul-Karim says the PA's financial crisis is political in nature.

"The PA's financial crisis resulted originally from a political crisis. We should differentiate between the Fayyad government's financial crisis and the broader Palestinian economic crisis," he told Ma'an.

US State Department spokeswoman Victoria Nuland told reporters on Friday that the US has unblocked nearly $500 million in frozen aid to the PA over the past few weeks.

"To date, we have moved $295.7 million in fiscal year 2012 money... and $200 million in fiscal year 2013 assistance," she said.

In 2011, US Congress froze $200 million in aid to the PA as punishment for seeking statehood at the United Nations. In 2012, the UN voted to admit Palestine as a non-member state, with Congress freezing the US administration's request for funds.

In February, US Secretary of State John Kerry promised to keep working with Congress to release budget support funds for the Palestinian Authority.