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Basic Law: State Economy

חוק-יסוד: משק המדינה

Published: 1975-07-31Consolidated Hebrew text as of 2026-01-01 · Last amended 2023-12-17✓ Amendment status checked against the Knesset legislation record on 2026-09-28
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More

This English text was translated from the official Hebrew using a range of translation tools, and it undergoes ongoing checks and updates. It is not a certified translation.

Despite these checks, it may contain errors, omissions, or imprecise renderings of legal terminology and cross-references, and it may not yet reflect the latest amendments. It cannot be relied upon as a legal text.

The Hebrew text as published in Reshumot (ספר החוקים) and on the Knesset website is the sole authoritative and legally binding version. In any discrepancy, the Hebrew text prevails.

This translation is provided for informational purposes only and does not constitute legal advice. For use in legal proceedings, request a certified Expert Legal Opinion.

Taxes, compulsory loans and fees§

1.
(a)Taxes, compulsory loans and other compulsory payments shall not be imposed, and their rates shall not be altered, except by or under law; the same applies to fees.
(b)Taxes, compulsory loans, other compulsory payments and fees payable to the State Treasury whose rates were not fixed in the body of the law and in respect of which no provision was prescribed by law requiring that their determination by Regulations be subject to approval by the Knesset or a committee thereof, their determination by Regulations requires prior approval or approval within the period prescribed therefor by law — by a decision of the Knesset or by a decision of a committee thereof that the Knesset has authorised for that purpose.

State assets§

2.

Transactions in State assets, the acquisition of rights and the assumption of obligations on behalf of the State shall be carried out by a person authorised to do so by or under law.

State budget§

3.
(a)
(1)The State budget shall be determined by law.
(2)The budget shall be for one year and shall present the anticipated and planned expenditure of the Government.
(b)
(1)
(a)The Government shall lay the draft budget law on the table of the Knesset at the time determined by the Finance Committee of the Knesset, but not later than sixty days before the commencement of the fiscal year and not earlier than six months before the commencement of the fiscal year;
(b)
(1)Notwithstanding the provisions of sub-paragraph (a), where the circumstances referred to in section 36a(b) of Basic Law: the Knesset have occurred and a budget law has not been passed before the commencement of the fiscal year, the Government shall lay the draft budget law on the table of the Knesset at the time determined by the Finance Committee of the Knesset, but not later than sixty days before the determining date referred to in that section, and for the purposes of that period the Jewish holidays and their eves, within the meaning of that section, shall not be taken into account;
(2)Where the circumstances referred to in sub-paragraph (1) have occurred, and in those circumstances only, the Government may lay on the table of the Knesset, together with the draft budget law referred to in sub-paragraph (1), a draft budget law for the following fiscal year, even if the date of laying is earlier than six months before the commencement of that fiscal year;
(2)The draft budget law shall be detailed;
(3)The detailed draft budget of the Ministry of Defence and the detailed draft budget of security bodies to be prescribed for this purpose by law shall not be laid on the table of the Knesset but on the table of a joint committee of the Finance Committee and the Foreign Affairs and Defence Committee of the Knesset;
(4)An estimate of the sources for its financing shall be annexed to the draft budget law.
(c)Where necessary, the Government may submit during the fiscal year a supplementary draft budget law.
(d)If the Government considers that the budget law will not be passed before the commencement of the fiscal year, it may submit an interim draft budget law.
(e)The Minister of Finance shall submit to the Knesset an annual report on the implementation of the State budget; particulars shall be prescribed by law.

Multi-year budget§

3a.
(a)The Government shall prepare, in advance of each fiscal year, a multi-year budget plan that shall include the draft budget law for the coming year as well as a budget plan for the two years following it.
(b)The Government shall lay the multi-year budget plan on the table of the Knesset together with the draft budget law.
(c)Every draft budget law that the Government submits to the Knesset shall be based on the multi-year budget plan that was prepared and laid on the table of the Knesset pursuant to this section in the preceding year.

Convergence mechanism§

3a1.
(a)Where the Government has laid on the table of the Knesset a draft budget law for the following fiscal year as referred to in section 3(b)(1)(b)(2) (in this section — the budget year), the following provisions shall apply:
(1)The budget law for the budget year shall prescribe an adjustments budget, the rate of which and the provisions regarding its use shall be determined by law (in this section — adjustments budget); the Government shall bring its proposal for the use of the adjustments budget before the Finance Committee of the Knesset for approval;
(2)The Government, on the proposal of the Minister of Finance, shall submit to the Knesset by 1 November in the year preceding the budget year, and not earlier than 15 October in the year preceding the budget year, a report on whether or not an expenditure gap or a deficit gap is anticipated in the budget year (in this section — gaps report); provisions regarding the submission of a gaps report and the particulars to be included therein shall be determined by law;
(3)The Minister of Finance shall report to the Finance Committee of the Knesset, not later than sixty days before the submission of the gaps report, on the anticipated economic and fiscal trends in the budget year;
(4)If, on the basis of the gaps report, an expenditure gap or a deficit gap is anticipated in the budget year, and according to that report use of the adjustments budget would not suffice to cover the full amount of that gap, the Minister of Finance shall submit to the Government for approval, together with the gaps report, a plan to cover the remaining gap (in this section — balancing plan); provisions regarding the preparation of a balancing plan and its particulars shall be determined by law; the Government shall approve and submit to the Knesset and to the Finance Committee of the Knesset the balancing plan together with the approval of the gaps report;
(5)Where the actions pursuant to the balancing plan have been carried out by 1 December in the year preceding the budget year and no deficit gap or expenditure gap remains, the Government shall confirm this in a decision to be given by that date and shall lay its confirmation on the table of the Knesset by 1 December in the year preceding the budget year;
(6)Where the actions pursuant to the balancing plan have not been carried out, or have been carried out only in part, by 1 December in the year preceding the budget year and a deficit gap or an expenditure gap remains, the following provisions shall apply, as the case may be:
(a)A deficit gap remains — the amount of permissible governmental expenditure under the budget law for the budget year shall be reduced by the amount of the remaining deficit gap; the Government, on the proposal of the Minister of Finance, shall bring before the Finance Committee of the Knesset for approval a plan to reduce the permissible governmental expenditure pursuant to this paragraph by 1 December in the year preceding the budget year;
(b)An expenditure gap remains — the Government, on the proposal of the Minister of Finance, shall bring before the Finance Committee of the Knesset for approval a plan to reduce the expenditure items in the budget law for the budget year in order to cover the remaining expenditure gap, by 1 December in the year preceding the budget year;
(c)Provisions regarding the plans to be submitted pursuant to sub-paragraph (a) or (b) and the approval of the Finance Committee of the Knesset shall be determined by law;
(7)The Finance Committee of the Knesset may propose to the Minister of Finance changes to the plan for reducing the permissible governmental expenditure as referred to in paragraph (6)(a) or (b), by 15 December in the year preceding the budget year; if the Committee has made such a proposal, the Government shall bring before the Committee for approval, after having considered the Committee's proposals, a plan for reducing the permissible governmental expenditure by 24 December in the year preceding the budget year;
(8)If the Finance Committee of the Knesset has not approved the plan submitted by the Government pursuant to paragraph (a)(a) or (b) or pursuant to paragraph (7), the expenditure amounts in the budget items of the budget law shall be reduced equally, by the amount of the remaining deficit gap or expenditure gap referred to in paragraph (6), as the case may be, in order to cover the remaining gap;
(9)The Finance Committee of the Knesset may lay on the table of the Knesset its conclusions from its deliberations as referred to in paragraphs (1), (3), (4) and (6) to (8); provisions on the deliberation of this matter in the Knesset shall be determined by law.
(a1)
(1)Notwithstanding the provisions of subsection (a), where an exceptional and unforeseen event has occurred that has a significant fiscal impact directly affecting the data underlying the gaps report referred to in paragraph (2) of subsection (a), and owing to the proximity of the event and its effects to the date of submission of the gaps report it is not possible to submit, by the time prescribed in that paragraph, a gaps report containing updated data as required by law, the Government may, on the proposal of the Minister of Finance, with the approval of the Knesset after receiving the recommendation of the Finance Committee of the Knesset, defer the time prescribed in that paragraph by a single period not exceeding 50 days (in this subsection — the deferral period);
(2)Where the Knesset has approved the deferral of the time as referred to in paragraph (1), the remaining times prescribed pursuant to subsection (a) shall be deferred accordingly (hereinafter — the deferred time), provided that a reduction pursuant to paragraph (8) of that subsection shall be carried out at the end of the deferral period counted from the time prescribed in section 7 of the Fiscal Adjustment Law, 5783-2023; however, if the Government has decided that the balancing plan shall include a supplementary draft budget law for the budget year, such a draft law shall be laid on the table of the Knesset not less than 30 days before the end of the deferral period, and the provisions of subsection (a) shall apply with the following modifications:
(a)A gaps report pursuant to paragraph (2) shall be submitted at the deferred time;
(b)In paragraph (4), the words "together with the gaps report" and "together with the approval of the gaps report" — shall not be read;
(c)Paragraphs (5) to (7) and (9) — shall not be read;
(d)In place of paragraph (8), the following shall be read:

"(8) Where the actions pursuant to the balancing plan have not been carried out, in whole or in part, the expenditure amounts in the budget items of the budget law shall be reduced at the deferred time equally, by the amount of the deficit gap or the expenditure gap, as the case may be, in order to cover the remaining gap.";

(3)The Knesset shall publish in Reshumot (Official Gazette) a notice of the updated times deferred pursuant to this subsection.
(b)In this section —

"deficit gap" means the difference between the deficit forecast for the budget year and the amount of the permissible deficit for the budget year, as determined by law;

"expenditure gap" means the difference between the governmental expenditure forecast for the budget year and the amount of the approved governmental expenditure for the budget year, as determined by law.

Failure to pass a budget law§

3b.
(a)If the budget law has not been passed before the commencement of the fiscal year, the following provisions shall apply with respect to the continuing budget year:
(1)The Government shall be entitled to incur expenditure as detailed below:
(a)Each month, an amount equal to one twelfth of the permissible governmental expenditure for the preceding year or of the governmental expenditure ceiling for the preceding year, each linked to the rate of population growth, whichever is lower;
(b)Expenditure conditional on revenue, in accordance with provisions to be determined by law;
(c)Expenditure of commercial enterprises that operated in the preceding fiscal year, in accordance with provisions to be determined by law;
(d)Repayment of principal debts that are not repayments of debts as aforesaid to the National Insurance Institute;
(e)For the purpose of financing the expenditure required to deal with the crisis created by the spread of the coronavirus, and for that purpose only —
(1)An amount not exceeding NIS 52.3 billion, to be allocated to the matters listed below and up to the amounts stated alongside them:
(a)Health, welfare, public order, internal security, immigration and absorption, and meeting the needs of Government ministries — NIS 7.2 billion;
(b)Preparation of the Ministry of Education for the 5781 academic year — NIS 2.5 billion;
(c)Reimbursement of the National Insurance Institute — NIS 9.8 billion;
(d)Grants and assistance to businesses and the self-employed — NIS 21.1 billion;
(e)Promotion of employment and development of human capital, financing of vocational training, assistance to non-profit associations and civil society organisations, and assistance to small and medium-sized businesses — NIS 1.2 billion;
(f)Promotion of employment through employment grants — NIS 0.5 billion;
(g)Property tax (arnona) discounts — NIS 2.2 billion;
(h)Budgetary cost of credit solutions — NIS 2.2 billion;
(i)Infrastructure, advanced technology, digitalisation and a crisis-exit plan — NIS 5 billion;
(j)Other purposes — NIS 0.6 billion;
(2)The residual amount from the sum allocated in 2020 for the purpose of financing the expenditure required to deal with the crisis created by the spread of the coronavirus, to be allocated to the same matters for which it was allocated in 2020;
(3)A change in the amounts allocated to the matters listed in sub-paragraph (1) at a rate exceeding 10 percent of any one of those amounts, including residual amounts added to those amounts as referred to in sub-paragraph (2), requires the approval of the Finance Committee of the Knesset;
(2)The Government shall be entitled to incur obligations within the limits of the amounts detailed below, provided that such obligations shall not increase expenditure in that year beyond the amount of expenditure in a continuing budget:
(a)The amount of authorisation to incur obligations, in accordance with provisions to be determined by law;
(b)The amount of expenditure in a continuing budget, the amount for expenditure conditional on revenue and the amount for expenditure of commercial enterprises, as referred to in sub-paragraphs (a) to (c) and (e) of paragraph (1), in accordance with provisions to be determined by law, provided that an obligation to incur expenditure as referred to in sub-paragraph (e) of paragraph (1) shall be for the matters listed therein and in accordance with the amounts specified alongside each such matter;
(c)The amount of surplus remaining in budget items of the preceding budget law, in accordance with provisions to be determined by law, less the amount referred to in paragraph (1)(e)(2);
(3)The Government shall be entitled to fill posts in a number not exceeding the number of posts specified in the preceding budget law.
(a1)(Lapsed).
(a2)(Lapsed).
(b)Funds pursuant to subsection (a)(1)(a) to (c) shall be designated first and foremost for the fulfilment of the State's obligations under law, contracts and treaties; from the remaining funds as aforesaid the Government shall make use only for the operation of essential services and activities that were included in the preceding budget law, including those included by means of budgetary amendments (in this subsection — essential services and preceding activities); the Government's obligations pursuant to subsection (a)(2) shall be only for essential services and preceding activities.
(b1)A plan containing the details of the Government's anticipated and planned expenditure pursuant to this section shall be laid by the Ministry of Finance on the table of the Government and shall be submitted to the Finance Committee of the Knesset not later than one month from the commencement of a continuing budget year; the details of expenditure in respect of the Ministry of Defence and the security bodies shall be laid on the table of the joint committee of the Finance Committee and the Foreign Affairs and Defence Committee of the Knesset, within the meaning of section 18 of the Budget Foundations Law, 5745-1985; the Minister of Finance shall report to the Finance Committee of the Knesset, once a month, on the Government's expenditure pursuant to such a plan.
(c)This section may not be amended except by a majority of the members of the Knesset.
(d)In this section —

"governmental expenditure" means net governmental expenditure, including the granting of credit, and excluding the repayment of principal debts only that is not the repayment of debts as aforesaid to the National Insurance Institute;

"the permissible governmental expenditure", for a particular fiscal year, means the amount of the permissible governmental expenditure under the budget law for that year, and if a budget law has not been passed for that year — the amount of the permissible governmental expenditure under this Basic Law;

"the amount of expenditure in a continuing budget" means the total annual amount of governmental expenditure as referred to in subsection (a)(1)(a) and (e);

"rate of population growth" means the average of the rates of population growth in Israel published by the Central Bureau of Statistics in the three years preceding the year prior to the continuing budget year;

"continuing budget year" means a fiscal year by the commencement of which a budget law for that year has not been passed, and if a budget law is passed during that year — the part of the fiscal year from its commencement until the passing of the budget law as aforesaid;

"governmental expenditure ceiling", for a particular fiscal year, means the maximum amount of governmental expenditure that may, under law, be set for that year in the budget law, less the amount of governmental expenditure in that year that is not taken into account as part of the maximum governmental expenditure that may under law be set in the budget law for the following year.

Legislation requiring a budget§

3c.
(a)A budgetary bill shall not be passed in the Knesset except by the votes of at least 50 members of the Knesset; the said majority is required at the first reading, the second reading and the third reading; however, if a bill becomes a budgetary bill after the first reading, the said majority is required at the second reading and the third reading.
(b)A budgetary reservation shall not be passed in the Knesset except by the votes of at least 50 members of the Knesset; if a budgetary reservation to a bill has been passed, the bill shall not be passed in the Knesset at the third reading except by the votes of at least 50 members of the Knesset.
(c)The determination of the budgetary cost, for the purposes of this section, of a bill or a reservation shall be made by a committee of the Knesset committees deliberating on that bill or reservation (hereinafter — the Committee); the Committee shall determine the budgetary cost on the basis of the assessment of the Minister of Finance or a person authorised by him to that effect, unless it has been demonstrated to its satisfaction, on the basis of another assessment submitted to it, that the budgetary cost differs from the assessment of the Minister of Finance; assessments pursuant to this section shall be submitted together with data and estimates.
(d)In this section —

"budgetary bill" means a bill in respect of which all of the following apply:

(1)It was not submitted by the Government;
(2)Its implementation involves a budgetary cost of NIS 7,194,585 or more, in any budget year;
(3)The Government has not given its consent to the budgetary cost;

"budgetary reservation" means a reservation to a bill in respect of which all of the following apply:

(1)Its implementation involves a budgetary cost of NIS 7,194,585 or more, in any budget year;
(2)The Government has not given its consent to the budgetary cost;

"budgetary cost" means expenditure or a commitment to expenditure from the State budget, or a reduction of State revenues, even if such expenditure or reduction as aforesaid is accompanied by a decrease in expenditure or a commitment to expenditure from the State budget, or by an increase in State revenues;

"expenditure from the State budget", "reduction of State revenues" — including expenditure from the budget of a budgeted body or a reduction of the revenues of a budgeted body;

"budgeted body" — as defined in section 21 of the Budget Foundations Law, 5745-1985.

(e)The amounts specified in the definitions of "budgetary bill" and "budgetary reservation" in subsection (d) shall be updated on 1 January of each year in accordance with the rate of change in the consumer price index published by the Central Bureau of Statistics.
(f)The provisions of this section shall not apply to a bill whose subject is the dissolution of the Knesset and the holding of elections.

Banknotes and coins§

4.

The printing of banknotes and the minting of coins to serve as legal tender, as well as their issue, shall be pursuant to law.

Audit§

5.

The State economy shall be subject to audit by the State Comptroller.

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