How did the Israel-Hamas War deepen the Palestinian Authority’s financial crisis in the West Bank?

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Oslo Accords: Declaration of Principles on Palestinian Self-Rule — Palestinian Authority U.S. Pres. Bill Clinton (center) looking on as Israeli Prime Minister Yitzhak Rabin (left) shakes hands with Palestinian leader Yasser Arafat after the signing of the Declaration of Principles on Palestinian Self-Rule, September 1993.

The Israel-Hamas War significantly deepened the financial crisis of the Palestinian Authority (PA) in the West Bank through two primary mechanisms:

Increased Tax Revenue Deductions: Israel’s finance minister, Bezalel Smotrich, increased the deductions taken from the tax revenue that Israel collects on behalf of the PA. This action severely strained the PA’s already limited financial resources.1
Loss of Employment Income: Prior to October 7, 2023, approximately 150,000 Palestinians from the West Bank worked in Israel. Following the outbreak of the war, most of these workers were not permitted to return to their jobs, resulting in a substantial loss of income for the Palestinian economy.1

These factors, combined with the ongoing challenges of the conflict, led the World Bank to warn in May 2024 that the Palestinian Authority was on the verge of collapse.1