Palestinian Prime Minister Salam Fayyad had asked donors meeting in Paris for $5.6 billion by 2010 to help realize his plan to develop a viable economy for a future state.
"We see this conference as an important vote of confidence on the part of the international community," Fayyad said as the conference wrapped up.
Some $3.4 billion of Monday's pledges would be handed over to the Palestinians in 2008, diplomats said.
Fayyad promised that the donated funds would be transferred to the West Bank and the Gaza Strip. "The money is meant for all Palestinians and will be budgeted according to the Palestinian government under the leadership of elected the elected president, President Mahmoud Abbas," Fayyad emphasized.
He also said that that the Palestinian government would monitor the manner in which the money was used.
Fayyad noted that, since the Oslo accords, the PA had received around $9 billion in aid, but said that there had been poor oversight on how the money was spent. He promised that the funds raised at the conference would be spent in a manner controlled and supervised by the international donors.
Tony Blair, Middle East envoy for the diplomatic Quartet, said the money would be used for "building the capacity and the institutions for the (Palestinian) state."
"Over the next few months what we have got to show to people is that we are capable of making the difference on the ground," he said.
International community to foot the bill
Around 70 countries, as well as all the major international organizations, attended the Conference of Donors for a Palestinian State a month after Israel and the Palestinians relaunched negotiations frozen for seven years at the Annapolis peace conference.
The European Union pledged $630 million, the US $555 million, Saudi Arabia $500 million, the United Arab Emirates, Kuwait, Britain, France and Germany pledged $300 million, Norway $140 million, Spain $60 million and Russia pledged $10 million.
AFP contributed to this report