The Palestinian prime minister says he wants to drastically reduce his government's reliance on foreign aid next year, and hopes to be able to pay for day-to-day operations with local revenues by 2013.

Salam Fayyad told The Associated Press in an interview Thursday that his decision was spurred by what he described as the Palestinian Authority's worst financial crisis since its inception in the mid-1990s.

The crisis was triggered by reduced foreign aid and Israel's suspension last month of the transfer of taxes it collects for the Palestinians.

Israel reversed itself Wednesday under international pressure. An Israeli official said Thursday that Israel might suspend the funds again in the future, as punishment for what it views as unilateral steps by the Palestinians to bypass peace talks.