April 13, 2018This prospectus supplement should be read in conjunction withthe accompanying prospectus dated April 13, 2018

$750,000,000

STATE OF ISRAELFLOATING RATE LIBOR BONDS SIXTEENTH SERIESISSUE PRICE 100 PER CENT

This is an offering by the State of Israel of an aggregate amount of $750,000,000 State of Israel Floating Rate LIBORBonds (Sixteenth Series) and Floating Rate LIBOR Bonds (Fifteenth Series) (the ‘‘bonds’’).* The full faith and credit ofIsrael will be pledged for the due and punctual payment of all principal and interest on the bonds.

We are offering bonds of five maturity periods: 1-Year Floating Rate LIBOR Bonds, 2-Year Floating Rate LIBOR Bonds,2-Year Floating Rate LIBOR Financing Bonds, 3-Year Floating Rate LIBOR Bonds, 3-Year Floating Rate LIBOR FinancingBonds, 5-Year Floating Rate LIBOR Bonds and 10-Year Floating Rate LIBOR Bonds. Your bond will mature on the firstcalendar day of the month during which the first, second, third, fifth or tenth anniversary, as the case may be, of the IssueDate of your bond occurs. You may buy each 2-Year Floating Rate LIBOR Financing Bond and 3-Year Floating RateLIBOR Financing Bond in a minimum denomination of $100,000 (and integral multiples of $25,000 in excess of$100,000). You may buy each 1-Year Floating Rate LIBOR Bond, 2-Year Floating Rate LIBOR Bond, 3-Year FloatingRate LIBOR Bond, 5-Year Floating Rate LIBOR Bond and 10-Year Floating Rate LIBOR Bond in a minimumdenomination of $5,000 (and integral multiples of $500 in excess of $5,000). The 2-Year and 3-Year Floating Rate LIBORFinancing Bonds may only be purchased if financed by an Authorized Institutional Lender.

The bonds will accrue interest from (and including) the Issue Date until (but not including) the maturity date, at a variablerate equal to the applicable six-month London Inter-Bank Offer Rate (‘‘LIBOR’’) (or, if LIBOR is discontinued, such otherinterest rate as may be selected by the calculation agent as further described on page S-6) plus or minus a fixed numberof basis points determined by the State of Israel (the ‘‘spread’’). The spread and the initial interest rate will be announcedone (1) Business Day prior to the first day of the sales period of the bond. Except in the cases described in thisprospectus supplement, interest will be paid every June 1 and December 1, and upon maturity. The bonds will not earnor accrue interest after maturity.

The transferability of the bonds is restricted as described in detail in the body of this prospectus supplement andthe accompanying prospectus.

See the section entitled ‘‘Risk Factors,’’ beginning on page S-9, for a discussion of certain factors you shouldconsider before investing in the bonds.

Assuming that we sell all of the bonds at the initial offering price, we will receive $704,935,000 of the proceedsfrom the sale of the bonds, after paying the underwriters’ selling concession which will not exceed $45,000,000and before expenses estimated at $65,000.

This offering may have a special appeal to persons with an interest in the State of Israel rather than the generalpublic. The bonds offered hereby are considered a separate and distinct class of securities, for all purposes, fromany other State of Israel debt instruments, whether denominated in U.S. dollars or otherwise. We have issues of debtinstruments outstanding which may, on any given day, provide a greater yield to maturity than the bonds beingoffered by this prospectus supplement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapprovedof the bonds or passed upon the adequacy or accuracy of this prospectus or the accompanying prospectus. Anyrepresentation to the contrary is a criminal offense.

* Bonds with an Issue Date on or after May 1, 2018 will be designated the ‘‘Sixteenth Series.’’ Bonds with an Issue Date prior to May 1,2018 will be designated the “Fifteenth Series.”

Development Corporation for Israel641 Lexington Avenue ⋅ New York, New York 10022-4503Member FINRA

Table of Contents

On April 11, 2018, the Bank of Israel foreign exchange representative rate for U.S. dollars was 3.518 New IsraeliShekels, or NIS, per U.S. dollar. References to ‘‘$’’ in this prospectus supplement are to U.S. dollars. For adiscussion of the convertibility of the NIS, see ‘‘Balance of Payments and Foreign Trade — Foreign ExchangeControls and International Reserves’’ in Exhibit D to Israel’s annual report on Form 18-K for the fiscal year endedDecember 31, 2016, which is incorporated by reference into this prospectus supplement.

This document contains two parts, the prospectus supplement and the accompanying prospectus, both of whichhave been filed with the Securities and Exchange Commission (the ‘‘SEC’’). The accompanying prospectus, whichstarts on page one after the prospectus supplement, contains general terms of bonds sold by the State of Israelthrough Development Corporation for Israel. You should base any decision to invest in the bonds on considerationof the prospectus supplement and the accompanying prospectus as a whole.

Prospectus Supplement

S-1 Summary of the Offering

S-3 About this Prospectus Supplement

S-4 Forward Looking Statements

S-4 Incorporation by Reference

S-4 Description of the Bonds

S-9 Risk Factors

S-13 United States Taxation

Prospectus

1 Where You Can Find More Information Aboutthe State of Israel

2 Use of Proceeds

2 Description of the Bonds

5 Plan of Distribution

5 Official Statements

5 Validity of the Bonds

5 Debt Record

6 Jurisdiction; Consent to Service andEnforceability

6 Authorized Representative

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SUMMARY OF THE OFFERING

The following summary should be read as an introduction to this prospectus supplement and is qualified in itsentirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in thisprospectus supplement and the accompanying prospectus. You should base any decision to invest in the bonds onconsideration of this prospectus supplement and the accompanying prospectus as a whole.

Issuer State of Israel (the ‘‘State’’ or ‘‘Israel’’).

Title of Security State of Israel Floating Rate LIBOR Bonds (Sixteenth Series) and Floating RateLIBOR Bonds (Fifteenth Series).

Aggregate Principal Amount $750,000,000.

Maturity Dates Your bond will mature on the first calendar day of the month during which the first,second, third, fifth or tenth anniversary, as the case may be, of the Issue Date ofyour bond occurs.

Issue Dates 1st and 15th of each month. To purchase a bond of a specific Issue Date, yoursubscription must be accepted before such Issue Date (or before such other dayas may be announced).

Denominations You may buy each 2-Year Floating Rate LIBOR Financing Bond and 3-YearFloating Rate LIBOR Financing Bond in a minimum denomination of $100,000 (andintegral multiples of $25,000 in excess of $100,000). You may buy each 1-YearFloating Rate LIBOR Bond, 2-Year Floating Rate LIBOR Bond, 3-Year FloatingRate LIBOR Bond, 5-Year Floating Rate LIBOR Bond and 10-Year Floating RateLIBOR Bond in a minimum denomination of $5,000 (and integral multiples of $500in excess of $5,000).

Limitations The 2-Year Floating Rate LIBOR Financing Bond and 3-Year Floating Rate LIBORFinancing Bond may only be purchased if financed by an Authorized InstitutionalLender.

Interest The bonds will accrue interest from (and including) the Issue Date until (but notincluding) the maturity date at a variable rate equal to the applicable six-monthLIBOR (or, if LIBOR is discontinued, such other interest rate as may be selected bythe calculation agent as further described on page S-6) plus or minus a fixednumber of basis points as applicable on the Issue Date. The interest rate will beadjusted semi-annually in accordance with the LIBOR rate in effect on theapplicable interest determination date. The bonds will not earn or accrue interestafter maturity.

Payments Interest will be paid every June 1 and December 1, and upon maturity, except thatfor bonds issued on May 15 and November 15 of each year, the first interestpayment will be made on the second interest payment date following their IssueDate. When the bonds become payable, you will receive the face amount of thebonds in U.S. currency.

Limitations on Transfer You may not assign or transfer the bonds, except in certain special instances.

Risk Factors There are certain risks relating to the bonds, which investors should ensure theyfully understand. See ‘‘Risk Factors.’’

Book Entry Bonds The bonds are issued in book-entry form. Certificates will be issued only togovernment agencies, pension funds, financial institutions and employee benefitplans that so request at the time of purchase.

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Fiscal Agent The bonds will be issued pursuant to the Amended and Restated Master FiscalAgency Agreement, dated as of December 24, 2013, as may be amended, furtheramended and restated or otherwise modified from time to time, by and among theState of Israel, Computershare Inc. and Computershare Trust Company, N.A.(collectively, ‘‘Computershare’’), as fiscal agent, paying agent, transfer agent andregistrar.

Taxation For a discussion of U.S. federal income tax consequences associated with thepurchase, ownership and disposition of the bonds, see ‘‘United States Taxation.’’Investors should consult their own tax advisors in determining the non-U.S., U.S.federal, state, local and any other tax consequences to them of the purchase,ownership and disposition of the bonds.

Governing Law The bonds will be governed by the laws of the State of New York, except withrespect to the authorization and execution of the bonds, which will be governed bythe laws of the State of Israel.

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ABOUT THIS PROSPECTUS SUPPLEMENT

Israel accepts responsibility for the contents of thisprospectus supplement and the accompanyingprospectus, including the documents incorporated byreference in this prospectus supplement and theaccompanying prospectus. Israel, having made allreasonable inquiries, confirms that this prospectussupplement and the accompanying prospectus containall information with respect to Israel and the bonds thatis material in the context of the issue and offering of thebonds, and that, to the best of Israel’s knowledge andbelief, there are no other facts the omission of whichwould make any such information materially misleading.

Prospective investors should rely on the informationprovided in this prospectus supplement, theaccompanying prospectus and the documentsincorporated by reference in this prospectussupplement and the accompanying prospectus. Noperson is authorized to make any representation or giveany information not contained in this prospectussupplement, the accompanying prospectus or thedocuments incorporated by reference in this prospectussupplement and the accompanying prospectus. Anysuch representation or information not contained in thisprospectus supplement, the accompanying prospectusor the documents incorporated by reference in thisprospectus supplement and the accompanyingprospectus must not be relied upon as having beenauthorized by Israel or the underwriters. Please see‘‘Where You Can Find More Information About TheState of Israel’’ in the accompanying prospectus forinformation on the documents that are incorporated byreference in this prospectus supplement and theaccompanying prospectus.

Israel is not offering to sell or soliciting offers to buyany securities other than the bonds offered under thisprospectus supplement, nor is Israel offering to sell orsoliciting offers to buy the bonds in places where suchoffers are not permitted by applicable law. You shouldnot assume that the information in this prospectussupplement or the accompanying prospectus, or theinformation Israel has previously filed with the SEC, andincorporated by reference in this prospectussupplement and the accompanying prospectus, isaccurate as of any date other than their respectivedates. Israel’s economic, fiscal or politicalcircumstances may have changed since such dates.

The bonds described in this prospectussupplement are debt securities of Israel being offeredunder a registration statement filed with the SEC underthe U.S. Securities Act of 1933, as amended. Theaccompanying prospectus is part of that registrationstatement. The accompanying prospectus provides youwith a general description of the securities that Israelmay offer, and this prospectus supplement containsspecific information about the terms of this offering andthe bonds. This prospectus supplement also adds,updates or changes information provided orincorporated by reference in the accompanyingprospectus. Consequently, before you invest, youshould read this prospectus supplement together withthe accompanying prospectus, the registrationstatement, any post-effective amendments thereto, andthe documents incorporated herein and therein byreference. See ‘‘Incorporation by Reference’’ for adescription of the documents incorporated by referencein this prospectus supplement and the accompanyingprospectus. In addition, as described herein, informationregarding the interest rates on the bonds for anyparticular sales period will be made available in a ratesheet that will be filed with the SEC and on the websiteof Development Corporation for Israel. Certain termsused but not defined in this prospectus supplement aredefined in the accompanying prospectus.

The distribution of this prospectus supplement andthe accompanying prospectus and the offering of thebonds in certain jurisdictions may be restricted by law.Persons who receive copies of this prospectussupplement and the accompanying prospectus shouldinform themselves about and observe any of thoserestrictions.

This prospectus supplement and theaccompanying prospectus, including the documentsincorporated by reference in this prospectussupplement and the accompanying prospectus, may beused only for the purposes for which they have beenproduced in connection with the offering of the bonds.Any use of this prospectus supplement and theaccompanying prospectus, including the documentsincorporated by reference in this prospectussupplement and the accompanying prospectus, otherthan in connection with the offering of the bonds, isunauthorized.

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FORWARD LOOKING STATEMENTS

Israel has made forward looking statements in thisprospectus supplement and the accompanyingprospectus. Statements that are not historical facts areforward looking statements. These statements arebased on Israel’s current plans, estimates, assumptionsand projections. Therefore, you should not place unduereliance on them. Forward looking statements speakonly as of the date they are made, and Israel undertakesno obligation to update any of them in light of newinformation or future events.

Forward looking statements involve inherent risks.Israel cautions you that many factors could affect thefuture performance of the Israeli economy. These factorsinclude, but are not limited to:

• External factors, such as:

• interest rates in financial markets outside Israel;

• the impact of changes in the credit rating ofIsrael;

• the global and regional security situation;

• the economic growth and stability of Israel’smajor trading partners, including the UnitedStates and the European Union;

• the global high-tech market; and

• regional economic and political conditions.

• Internal factors, such as:

• general economic and business conditions inIsrael;

• the security situation in Israel;

• present and future exchange rates of the Israelicurrency;

• foreign currency reserves;

• the level of domestic debt;

• domestic inflation;

• the level of budget deficit;

• the level of foreign direct and portfolioinvestment; and

• the level of Israeli domestic interest rates.

INCORPORATION BY REFERENCE

Israel has filed its annual report for 2016 on Form 18-Kwith the SEC. The annual report of Israel for 2016 onForm 18-K, its exhibits and any amendment to that annualreport on Form 18-K and its exhibits, as well as all futureannual reports and amendments to such annual reports thatIsrael files with the SEC until Israel sells all of the bondscovered by this prospectus supplement, are considered partof and incorporated by reference in this prospectussupplement. Each time Israel files a document with the SECthat is incorporated by reference, the information in thatdocument automatically updates the information contained

in previously filed documents. All of these documents havebeen or will be filed with the SEC and will be available forinspection at the office of the SEC. You may also obtain acopy of all such documents, free of charge, at the offices ofthe fiscal agent in New York City or at the office listed in theaccompanying prospectus under the heading ‘‘Where YouCan Find More Information About the State of Israel.’’ Inaddition, the SEC maintains an Internet site that containsreports and other information regarding issuers, like Israel,that file electronically with the SEC (www.sec.gov).

DESCRIPTION OF THE BONDS

We are issuing the bonds under the Amended andRestated Master Fiscal Agency Agreement, dated as ofDecember 24, 2013 (as amended, further amended andrestated or otherwise modified from time to time, the ‘‘FiscalAgency Agreement’’) between the State of Israel andComputershare, as fiscal agent (the ‘‘Fiscal Agent’’).

This section of this prospectus supplement is asummary of the material provisions of the bonds and theFiscal Agency Agreement. Because it is only a summary, thedescription may not contain all of the information that isimportant to you as a potential investor in the bonds.Therefore, Israel urges you to read the Fiscal AgencyAgreement and the form of bond in making your decision onwhether to invest in the bonds. Israel has filed copies of

these documents with the SEC, and all of these documentsmay be inspected at the office of the SEC. Copies of theFiscal Agency Agreement, including the form of bond, maybe inspected during normal business hours on any weekday(Saturdays, Sundays and public holidays excepted) at theoffices listed in the accompanying prospectus under theheading ‘‘Where You Can Find More Information About theState of Israel’’ and at the offices of the Fiscal Agent.

Any capitalized terms that are defined in theaccompanying prospectus have the same meanings in thissection unless a different definition appears in this section. Ifthere are any inconsistencies between the information in thissection and the information in the accompanyingprospectus, the information in this section controls.

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Whenever used in this prospectus supplement orthe accompanying prospectus, a ‘‘Business Day’’ shallmean any banking day in New York, New York.

The Offering. We are offering $750,000,000aggregate principal amount of Floating Rate LIBORBonds (Sixteenth Series) and Floating Rate LIBORBonds (Fifteenth Series).* We are offering bonds of fivematurity periods:

• 1-Year Floating Rate LIBOR Bonds,

• 2-Year Floating Rate LIBOR Bonds,

• 2-Year Floating Rate LIBOR Financing Bonds,

• 3-Year Floating Rate LIBOR Bonds,

• 3-Year Floating Rate LIBOR Financing Bonds,

• 5-Year Floating Rate LIBOR Bonds, and

• 10-Year Floating Rate LIBOR Bonds.

The bonds are direct, unconditional and generalobligations of the State of Israel. We pledge our full faithand credit for the due and punctual payment of principaland accrued interest, as well as for the due and timelyperformance of all of our obligations with respect to thebonds. The terms of the bonds are as follows:

Denominations.

• You may buy each 2-Year Floating Rate LIBORFinancing Bond and 3-Year Floating Rate LIBORFinancing Bond in a minimum denomination of$100,000 and integral multiples of $25,000 inexcess of $100,000.

• You may buy each 1-Year Floating Rate LIBORBond, 2-Year Floating Rate LIBOR Bond, 3-YearFloating Rate LIBOR Bond, 5-Year Floating RateLIBOR Bond and 10-Year Floating Rate LIBORBond in a minimum denomination of $5,000. Inaddition, after you have purchased a minimum of$5,000 of 2-Year Floating Rate LIBOR Bonds,3-Year Floating Rate LIBOR Bonds, 5-Year FloatingRate LIBOR Bonds, or 10-Year Floating RateLIBOR Bonds in a single purchase, then during thetwelve (12) month period immediately following youmay purchase additional bonds of the samematurity period in denominations of $500 andintegral multiples of $500 at the interest rate ineffect at the time of each such additional purchase.For the avoidance of doubt, if you purchased bondsof the Fourteenth or Fifteenth Series, respectively,that meet the foregoing minimum purchase andtime requirements, you may purchase additionalbonds of the Fifteenth or Sixteenth Series offeredhereby, respectively, subject to the same

restrictions. Additional bonds must be registered inthe same name as the bonds satisfying theminimum purchase requirement.

Issue Dates and Sales Periods. The bonds willbe issued on the 1st and 15th of each month (each, an‘‘Issue Date’’). There will be two (2) sales periods permonth:

• bonds issued on the 15th of the month will beoffered from the 1st of the month through the 14thof the month; and

• bonds issued on the 1st of the month will beoffered from the 15th of the month preceding theIssue Date through the last day of that month.

In order to purchase a bond of a specific IssueDate, your subscription must be accepted by or onbehalf of Israel before such Issue Date (or before suchother date as may be announced). If your subscription isaccepted by or on behalf of Israel on or after an IssueDate (or such other date), your bond will be issued on asubsequent Issue Date. However, if you are reinvestinga matured State of Israel bond, in order for your newbond to be issued on the maturity date of yourreinvested bond, your subscription must be accepted byor on behalf of Israel within five (5) calendar days afterthe maturity date of your reinvested bond (or, if suchdate falls on a non-Business Day, the first Business Dayafter such date). Unless sales of a certain bond aresuspended, a subscription shall be deemed to havebeen accepted as of the date upon which thecompleted subscription forms and the purchase priceare actually received in form acceptable to the FiscalAgent or to Development Corporation for Israel onbehalf of the Fiscal Agent.

Maturity. Your bond will mature on the firstcalendar day of the month during which the first (1st),second (2nd), third (3rd), fifth (5th) or tenth (10th)anniversary, as the case may be, of the Issue Date ofyour bond occurs. For example, a 5-Year Floating RateLIBOR Bond issued on July 15, 2018 will mature onJuly 1, 2023. If your Issue Date is the 15th of the month,your bond will mature two (2) weeks earlier than the totalnumber of years of the bond. When the bonds becomepayable, you will receive the face amount of the bondsin United States currency.

Interest Rate and Interest DeterminationDates. The initial interest rate is equal to the six-monthLondon Inter-Bank Offer Rate (‘‘LIBOR’’) in effect three(3) Rate-Setting Days prior to the first day of the salesperiod of such bond, as appears on Bloomberg (or suchother recognized quotation system as may be designated

* Bonds with an Issue Date on or after May 1, 2018 will be designated the ‘‘Sixteenth Series.’’ Bonds with an Issue Date prior to May 1, 2018will be designated the “Fifteenth Series.”

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by Israel from time to time), rounded upwards to the nextone-sixteenth (1/16) of one percent, if the quoted interestrate is not equivalent to one-sixteenth (1/16) ofone percent (the ‘‘Applicable LIBOR Rate’’), plus or minusa fixed number of basis points (the ‘‘spread’’). The spreadof each bond shall remain fixed until maturity and will bestated on the book-entry statement or bond certificate.After the initial interest period, the interest rate will beadjusted semi-annually in accordance with the ApplicableLIBOR Rate in effect on the applicable interestdetermination date, which is three (3) Rate-Setting Daysprior to June 1 and December 1 of each year. In no eventwill the interest rate payable on the bonds be less than 0%per year. ‘‘Rate-Setting Day’’ shall mean any day otherthan a Saturday, Sunday or other day on which banks areauthorized or required by law to be closed in New York,London or Toronto.

The spread and the initial interest rate applicable toeach bond will be determined by the State of Israel andincluded in a Free Writing Prospectus which will be filedwith the SEC not less than one (1) Business Day prior tothe first day of the sales period of such bond. If such dateis a legal holiday in Israel, the Free Writing Prospectus maybe filed with the SEC one (1) Business Day earlier. Forexample, the initial interest rate on a 5-Year Floating RateLIBOR Bond issued on Friday, June 1, 2018 will beannounced one (1) Business Day prior to May 15, 2018,i.e., on Monday, May 14, 2018 (or, if such date were alegal holiday in Israel, on Friday, May 11, 2018).

If the calculation agent determines on the relevantinterest determination date that the LIBOR base rate hasbeen discontinued, then the calculation agent will use asubstitute or successor interest rate that it has determinedin its sole discretion is most comparable to the LIBORinterest rate, provided that if the calculation agentdetermines there is an industry-accepted successorinterest rate, then the calculation agent shall use suchsuccessor interest rate. If the calculation agent hasdetermined a substitute or successor interest rate inaccordance with the foregoing, the calculation agent in itssole discretion may determine what business dayconvention to use, the definition of business day, theinterest determination date and any other relevantmethodology for calculating such substitute or successorbase interest in a manner that is consistent withindustry-accepted practices for such substitute orsuccessor interest rate.

Unless the calculation agent determines to use asubstitute or successor base rate as so provided, and ifno offered LIBOR appears on Bloomberg (or such otherrecognized quotation system as may be designated byIsrael from time to time) on the relevant interestdetermination date, then the calculation agent, after

consultation with the State, will select four major banks inthe London interbank market and will request each of theirprincipal London offices to provide a quotation of the rateat which six-month deposits in U.S. dollars in amounts ofat least $1,000,000 are offered by it to prime banks in theLondon interbank market, on that date and at that time,that is representative of single transactions at that time. Ifat least two quotations are provided, then six-monthLIBOR for the relevant interest period will be the arithmeticaverage (rounded upward if necessary to the nearestwhole multiple of 0.00001%) of the quotations provided.Otherwise, the calculation agent will select three majorbanks in New York City and will request each of them toprovide a quotation of the rate offered by it on the interestdetermination date for loans in U.S. dollars to leadingEuropean banks having an index maturity of six monthsfor the applicable interest determination date in an amountof at least $1,000,000 that is representative of singletransactions at that time. If three quotations are provided,then six-month LIBOR for the relevant interestdetermination date will be the arithmetic average (roundedupward if necessary to the nearest whole multiple of0.00001%) of the quotations provided. Otherwise, thecalculation agent, after consulting such sources as itdeems comparable to any of the foregoing quotations ordisplay page, or any such source as it deems reasonablefrom which to estimate six-month LIBOR or any of theforegoing lending rates, shall determine six-month LIBORfor the relevant interest determination date in its solediscretion. The calculation agent will instruct the fiscalagent as to the interest rate to apply, and the fiscal agentshall be entitled to rely on such instruction.

Absent manifest error, the calculation agent’sdetermination of the interest rate for an interestdetermination date for the bonds will be binding andconclusive on the bondholder, the fiscal agent and theState. The calculation agent’s determination of anyinterest rate will be maintained on file by the State andDevelopment Corporation for Israel at the addressesprovided in the Prospectus and will be made available toany bondholder upon request and will be published on thewebsite of Development Corporation for Israel.

The calculation agent has not yet been appointed;Israel may appoint itself or designate a third party ascalculation agent.

Interest and Maturity Payments. Interest willaccrue from (and including) the Issue Date of the bondsuntil (but not including) the maturity date. We will payinterest semi-annually on June 1 and December 1 (each,an ‘‘Interest Payment Date’’), and upon maturity, exceptthat for bonds issued on May 15 and November 15 ofeach year, the first interest payment will be made on thesecond Interest Payment Date following their respective

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Issue Dates. If any Interest Payment Date is not aBusiness Day, we will pay interest that has accrued until(but not including) either June 1 or December 1, as thecase may be, on the next Business Day, but interestthat accrues from either June 1 or December 1, as thecase may be, until (but not including) the date on whichthe interest is paid, will be paid on the next InterestPayment Date. We will calculate interest for each of theabove periods as a percentage of theannual percentage rate based on a 365-day year andthe actual number of days elapsed. When the bondsmature, you will receive the face amount of the bonds inUnited States currency. If the maturity date is not aBusiness Day, you will receive payment accrued until(but not including) the maturity date on the nextBusiness Day but no additional interest will accrue or bepayable by reason of such extension. The bonds will notearn or accrue interest after maturity.

Limitation on Purchases. The 2-Year and 3-YearFloating Rate LIBOR Financing Bonds may only bepurchased if financed by an Authorized InstitutionalLender. ‘‘Authorized Institutional Lender’’ means anentity primarily engaged in the business of makingsecured loans to institutional and non-institutionalborrowers, authorized in writing by Israel to acceptbonds as collateral security.

Right to Suspend or Terminate Sales. Israelreserves the right to suspend or terminate new sales ofany series or maturity periods of bonds at any time, forany period of time and for any reason, including withoutlimitation, for reasons relating to market conditions. Anysubscription received in respect of a series or maturityperiod of bonds for which sales have been suspended willbe returned to the subscriber.

Limited Transferability. You may not transfer,assign or pledge the bonds, in whole or in part, or anyinterest therein, and the bonds may not be securitized,except as described herein or with the prior writtenconsent of Israel. You may transfer the bonds to thefollowing permitted transferees under the circumstancesdescribed below, provided that each such transferee ofthe bonds must hold at least the minimum purchaserequirement (see ‘‘— Denominations’’ above) with respectto such bonds:

• Israel. If you donate your bond to Israel, the bond(and any bond payments to which you might beentitled) will be canceled and the debt representedby the bond and/or check will be deemed forgiven;

• Any religious, charitable, literary, scientific oreducational organization, contributions to whichare, at the time of the transfer, deductible forincome and similar tax purposes under the UnitedStates Internal Revenue Code of 1986, as

heretofore or hereafter amended (or are accordedsimilar treatment under the laws of the country inwhich the transferee is located) provided that atransfer to such entity is made by gift or bequestwithout any compensation to the transferor;

• The registered owner’s spouse, children,grandchildren, siblings, parents or grandparents;

• Upon the death of the bondholder, to any person inaccordance with such bondholder’s testamentarydisposition and/or applicable laws of descent anddistribution;

• Provided the transfer is made by the registeredowner of a 2-Year Floating Rate LIBOR FinancingBond or 3-Year Floating Rate LIBOR FinancingBond, as collateral security to an AuthorizedInstitutional Lender, and only at the time ofpurchase of the bond. ‘‘Authorized InstitutionalLender’’ shall mean an entity primarily engaged inthe business of making secured loans toinstitutional and non-institutional borrowers,authorized in writing by Israel to accept bonds ascollateral security; or

• Anyone designated by a written direction signed inthe name of the State of Israel as a permissibletransferee.

Due to the limited transferability of the bonds and thelimited circumstances under which we will purchase thebonds (see ‘‘— Early Redemption’’ below), bondholdersmay not be able to readily liquidate their investment priorto maturity.

Event of Default. If we default on the payment ofinterest or principal with respect to a particular bond:

• Any amount of interest or principal in default willaccrue interest at the interest rate applicable to thatbond on the date of such default until such defaultis cured; and

• If any default continues for a period of ninety (90)calendar days, the principal amount of the bondwill, at the option of, and upon written demand tous by, the registered owner(s) of the bond, matureand become due and payable, together withaccrued and unpaid interest, upon the date thatsuch written demand is actually received by us,unless prior to such date we cured all defaults inrespect of the bonds.

Early Redemption. The bonds are subject to earlyredemption and repurchase by the State as describedunder this heading. Whether the bonds are redeemed atthe option of the State, or repurchased by the State at therequest of the bondholder or on such other terms andconditions as the State may determine, the State will

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redeem or repurchase bonds for a purchase price equalto the principal amount of the bond together with interestaccrued to the redemption or repurchase date. If theredemption or repurchase price is not paid upon thesurrender of any bond, then such bonds will continue toaccrue interest at the rate prescribed for such bondsthrough the maturity of the bond.

Repurchase by the State at the Request of aBondholder. A bond may be repurchased by the Stateprior to its maturity, but only on the first Business Day of agiven month, within sixty (60) days following the State’sreceipt of a bondholder’s written request accompanied byan instrument of transfer in a form approved by the FiscalAgent, under the following four scenarios:

• Upon the death of any natural person who was theoriginal registered owner of the bond (‘‘OriginalOwner’’) or, in the event there is more than oneOriginal Owner, upon the death of the last survivingOriginal Owner; provided that such obligation of theState to repurchase upon death shall cease andterminate and shall not apply when the bond isowned by a transferee or assignee.

• Upon the death of the Original Owner or, in theevent there is more than one Original Owner, uponthe death of the last surviving Original Owner,where such Original Owner(s) contributed the bondto a trust of which the Original Owner(s) is(are) thesole beneficiary(ies); provided that such obligationof the State to repurchase upon death shall ceaseand terminate and shall not apply when the bond isowned by a transferee or assignee.

• Upon the death of any natural person (or thedissolution of a testamentary trust following thedeath of such person) who owned such bondthrough an IRA, Roth IRA or Keogh or H.R. 10 Plan.

• Upon the termination of any Employee Benefit Planwhich owned such bond; unless, in the case of anIRA, Roth IRA or a Keogh or H.R. 10 Plan, thebeneficiary or administrator of such plan advises theState or Development Corporation for Israel that itintends to transfer such plan to another plan in a‘‘rollover’’ transaction, as such term is defined inSection 402 of the Internal Revenue Code of 1986,within the time limit prescribed for such ‘‘rollover.’’In order to redeem a bond upon the termination ofan Employee Benefit Plan that is the owner of thebond, sufficient evidence must be provided to theState that such Employee Benefit Plan has beenterminated and that the assets must be liquidatedto meet the Plan’s commitments.

The first three scenarios described above aresubject to the caveat that the State may suspend orterminate its obligation to purchase such bond if, in the

opinion of the State, a material number of the affectedoriginal registered owners have died as a result of war,epidemic, catastrophe of nature or other disaster.

As used herein, ‘‘Employee Benefit Plan’’ meansany employee benefit plan as defined in Section 3 of theEmployee Retirement Income Security Act of 1974, asamended, or any comparable legislation in effect at thetime of determination, or any Individual RetirementAccount, Roth Individual Retirement Account, Keogh orH.R. 10 Plan, or, subject to the approval of the State, aplan or fund, if any, irrespective of its location or place ororganization, determined by the State to be acomparable plan or fund.

Redemption at the Option of the State. Thebonds are subject to redemption at any time by theState. The bonds of this series are redeemable as awhole or in part. If the bonds are redeemed in part,selection of the bonds will be at the State’s discretion;however, the bonds will be redeemed in groups, suchthat each group of bonds will consist of all bonds of thisseries that bear the same Issue Date (each, a‘‘tranche’’). In addition, no bonds of a particular tranchewill be redeemed at the option of the State unless bondsof tranches with prior Issue Dates are or have beencalled for redemption. For purposes of such redemption,the bonds will be called in accordance with theprovisions of the Fiscal Agency Agreement, and therewill be no aggregation of different series or other debtinstruments of the State. (For the avoidance of doubt,there will be no aggregation irrespective of any similarityin name, maturity, currency, denomination, integralterms and/or Issue Date between the bonds offeredhereby and any different series or other debtinstruments of the State.) A notice of redemption will bemailed to all bondholders by the Fiscal Agent betweenthirty (30) and sixty (60) days prior to the redemptiondate. The notice will set forth:

• The redemption date;

• Whether all bonds or a group of bonds are to beredeemed;

• In the case of a redemption of a group of bonds, adescription of the group of bonds that are to beredeemed;

• The redemption price;

• That on the redemption date no owner of bondscalled for redemption is entitled to more than theredemption price, and that the redemption price isdue and payable on the redemption date; and

• The place where the bonds are to be redeemed.

The State will not be required to issue or register thetransfer or exchange of any bond during the period

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beginning with the fifteenth (15th) Business Day prior to thedate of the mailing of a notice of redemption through theend of the date of the mailing. The State will also not berequired to register the transfer or exchange of any bondselected for redemption in whole or in part, except for theunredeemed portion of the bonds being redeemed in part.

Repurchase by the State Under Other Terms andConditions. In addition to a redemption or repurchaseof the bonds as described above (see ‘‘— Repurchase bythe State at the Request of Bondholder’’ and‘‘— Redemption at the Option of the State’’), the Statereserves the right to repurchase the bonds in whole or inpart, at any time, at such terms and under suchconditions as may be determined by the State. Bonds sorepurchased shall be purchased from bondholders willingto sell such bonds on the terms and conditionsdetermined by the State in respect of such repurchase.Repurchased bonds may be held or resold by the State orsurrendered to the Fiscal Agent for cancellation inaccordance with the Fiscal Agency Agreement.

Bond Certificate. We are issuing the bonds inbook entry form. Therefore, bond certificates will not beissued (except in the limited circumstances describedbelow in this paragraph). Instead, the Fiscal Agent willmail to the purchaser and owner of each bond aconfirmation that the owner has been listed in the bondregister as the registered owner of the bond along withother pertinent information. Certificates will be issuedonly to government agencies, pension funds, financialinstitutions and Employee Benefit Plans that so requestat the time of purchase. We will forward all noticesrelating to the bonds to the registered owner(s). Youmay transfer a bond, if permitted under the terms of thisprospectus supplement, by notifying the Fiscal Agent inwriting of the transfer request along with appropriatetransfer documents and any fee and expenses, requiredby the Fiscal Agent to be paid by the transferor. Thetransferor must also pay the State for any of the State’sexpenses in connection with the transfer. The FiscalAgent will then record the transfer in the bond register.We will only repurchase bonds upon presentation ofappropriate transfer documents (and the bond certificateif one was issued) to the Fiscal Agent. Upon maturity ofa book entry bond or redemption of a book entry bond,the Fiscal Agent will automatically pay the principalamount and accrued interest on the book entry bond tothe registered owner by mailing a check to the last

address of the registered owner as listed in the bondregister or, if written instructions are given by theregistered owner, by automatic clearing house funds tothe bank and bank account specified by the registeredowner. Bond certificate holders must present thephysical certificate to the Fiscal Agent to receivepayment. The bond owner will bear all expenses inconnection with the replacement and delivery of a newbond. Israel will issue a new bond certificate to the bondowner for no cost, in the event the bond owner notifiesthe Fiscal Agent in writing that the bond certificate wasnever delivered, no later than six (6) months followingthe original Issue Date of the bond.

Fiscal Agent. Computershare will act as the fiscalagent for the bonds. The address for Computershare is250 Royall Street, Canton, MA 02021, Attention: State ofIsrael Bonds. The telephone number is 1-866-SOI-DIAL(764-3425).

Other State of Israel Debt Instruments. TheState issues debt instruments, including securitiesdenominated in U.S. dollars, whose names, series,maturities, denominations, issue dates, interestcommencement dates, maturity dates and/or otherintegral terms may be similar to those of the bonds. Thebonds offered hereby are considered a separate anddistinct class of securities, for all purposes, from anyother State of Israel debt instruments irrespective of anysuch similarity. For purposes of a redemption at theoption of the State, the bonds will be called inaccordance with the provisions of the Fiscal AgencyAgreement, and there will be no aggregation of differentseries or other debt instruments of the State (see ‘‘EarlyRedemption — Redemption at the Option of the State’’above).

The foregoing description of the material terms ofthe bonds is qualified by reference to the full terms ofthe bonds. Bonds offered and sold outside of the UnitedStates may be offered and sold in reliance onRegulation S or another applicable exemption from theregistration requirements of the Securities Act of 1933,as amended. Such bonds have not been and will not beregistered under the Securities Act. Accordingly, subjectto certain exceptions, such bonds may not be offered,sold or delivered within the United States to UnitedStates persons.

RISK FACTORS

You should read this prospectus supplement, theaccompanying prospectus and the documentsincorporated by reference herein and therein carefully.Words and expressions defined elsewhere in this

prospectus supplement and the accompanyingprospectus have the same meaning in this section.Investing in the bonds involves certain risks. Israel maybecome unable to pay interest, principal or other

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amounts on or in connection with the bonds for anynumber of reasons. Factors which Israel currently viewsas material for assessing the risks of investing in thebonds are described below. However, additional risksthat are not currently known to Israel, or that it currentlydeems immaterial, may arise or become material and,accordingly, Israel does not represent that thestatements below regarding the risks of investing in thebonds are exhaustive. The materialization of any suchknown or unknown risks could, individually orcumulatively, have a material adverse effect on Israel’sability to make payments on the bonds, in which caseyou could lose all or part of your investment. You shouldconsider carefully whether an investment in the bonds issuitable for you in light of your personal circumstances.You should make your own inquiries as you deemnecessary without relying on Israel or any underwriterand should consult with your financial, tax, legal,accounting and other advisors prior to deciding whetherto make an investment in the bonds. You shouldconsider, among other things, the following:

Risks related to the bonds

The bonds may not be a suitable investment for allinvestors.

You must determine the suitability of investment inthe bonds in light of your own circumstances. Inparticular, you should:

(i) have sufficient knowledge and experience to makea meaningful evaluation of the bonds and the meritsand risks of investing in the bonds;

(ii) have access to, and knowledge of, appropriateanalytical tools to evaluate, in the context of yourparticular financial situation, an investment in thebonds and the impact the bonds will have on youroverall investment portfolio;

(iii) have sufficient financial resources and liquidity tobear all of the risks of an investment in the bonds,including where the currency for principal or interestpayments is different from your currency;

(iv) understand thoroughly the terms of the bonds andbe familiar with the behavior of any relevant indicesand financial markets; and

(v) be able to evaluate (either alone or with the help ofa financial advisor) possible scenarios for economic,interest rate and other factors that may affect yourinvestment and your ability to bear the applicablerisks.

There is no secondary trading market for the bondsand transferability is limited.

Except under certain limited circumstances, thebonds may not be transferred, sold or pledged. As aresult, no secondary market can develop for the bondsand they will not be traded on an established securitiesmarket (or the substantial equivalent thereof).

There can be no assurance that the laws of theState of New York in effect as of the date of thisprospectus supplement will not be modified.

The conditions of the bonds are based on the lawsof the State of New York in effect as of the date of thisprospectus supplement. No assurance can be given asto the impact of any possible judicial decision or changeto New York law or administrative practice after the dateof this prospectus supplement.

Legal investment considerations may restrict certaininvestments.

The investment activities of certain investors aresubject to legal investment laws and regulations, orreview or regulation by certain authorities. You shouldconsult your legal advisors to determine whether and towhat extent (i) the bonds are legally permissibleinvestments for you, (ii) the bonds can be used ascollateral for various types of borrowing and (iii) otherrestrictions apply to your purchase or pledge of anybonds. Financial institutions should consult their legaladvisors or the appropriate regulators to determine theappropriate treatment of the bonds under any applicablerisk-based capital or similar rules.

Investors in the bonds may be subject to interestrate risks.

Investment in floating rate bonds involves the riskthat a fall in the market interest rate (plus or minus thespread) may result in a lower, or no, amount of interest.

If LIBOR is discontinued, interest on the bonds maybe calculated using another interest rate.

On July 27, 2017, the Chief Executive of the U.K.Financial Conduct Authority (the ‘‘FCA’’), whichregulates LIBOR, announced that the FCA will no longerpersuade or compel banks to submit rates for thecalculation of LIBOR after 2021. The announcementindicates that the continuation of LIBOR on the currentbasis cannot and will not be guaranteed after 2021.Based on the foregoing, it appears likely that LIBOR willbe discontinued or modified by 2021.

Under the terms of the bonds, the interest rate is avariable rate equal to the applicable six-month LIBOR. Ifthe calculation agent is unable to determine the

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six-month LIBOR based on screen-based reporting ofthat interest rate, and if the calculation agent is alsounable to obtain suitable quotations for six-monthLIBOR from reference banks, then the calculation agentwill determine the six-month LIBOR after consultingsuch sources as it deems comparable or reasonable. Inaddition, if the calculation agent determines that thesix-month LIBOR has been discontinued, then thecalculation agent will determine whether to calculate therelevant interest rate using a substitute or successorinterest rate that it has determined in its sole discretionis most comparable to the six-month LIBOR, providedthat if the calculation agent determines there is anindustry-accepted successor interest rate, thecalculation agent will use that successor interest rate. Insuch instances, the calculation agent in its solediscretion may determine with respect to the calculationof interest on the bonds what business day conventionto use, the definition of business day, the interestdetermination date to be used and any other relevantmethodology for calculating such substitute orsuccessor interest rate, including any adjustment factorneeded to make such substitute or successor interestrate comparable to the LIBOR interest rate, in a mannerthat is consistent with industry-accepted practices forsuch substitute or successor interest rate, with respectto the calculation of interest on the bonds. Any of theforegoing determinations or actions by the calculationagent could result in adverse consequences to theapplicable interest rate on the bonds, which couldadversely affect the return on, value of the bonds. Thecalculation agent has not yet been appointed; Israel mayappoint itself or designate a third party as calculationagent.

Regulation and reform of interest rate‘‘benchmarks’’, including LIBOR, may cause such‘‘benchmarks’’ to perform differently than in thepast, to disappear entirely or to have otherconsequences which cannot be predicted.

LIBOR and other interest rate, equity, foreignexchange rate and other types of indices which aredeemed to be ‘‘benchmarks’’ are the subject of recentinternational, national and other regulatory guidance andproposals for reform. Some of these reforms are alreadyeffective while others are still to be implemented. Thesereforms may cause such ‘‘benchmarks’’ to performdifferently than in the past or to disappear entirely, orhave other consequences which cannot be predicted.Any such consequence could have a material adverseeffect on the return on and value of the bonds.

Any of the international, national or other proposalsfor reform or the general increased regulatory scrutiny ofLIBOR and other ‘‘benchmarks’’ could increase the

costs and risks of administering or otherwiseparticipating in the setting of such ‘‘benchmarks’’ andcomplying with any such regulations or requirements.Such factors may have the effect of discouraging marketparticipants from continuing to administer or contributeto certain ‘‘benchmarks’’, trigger changes in the rules ormethodologies used in certain ‘‘benchmarks’’ or lead tothe disappearance of certain ‘‘benchmarks’’. Inparticular, changes in the manner of administration ofLIBOR could result in adverse consequences to theapplicable interest rate on the bonds, which couldadversely affect the return on and value of the bonds.

The bonds are unsecured.

The bonds constitute unsecured obligations of theState of Israel. This means that bondholders will nothave recourse to any security or other assets of theState of Israel should the State of Israel default on itspayment obligations in respect of the bonds.

The bonds are subject to optional redemption orrepurchase by the State of Israel.

The State of Israel may redeem or repurchase thebonds in whole or in part, at any time or from time totime, prior to their scheduled maturity dates. Forexample, the State of Israel may choose to redeem orrepurchase the bonds when its cost of borrowing islower than the interest rate on the bonds. Upon suchredemption or repurchase, an investor might not be ableto reinvest the redemption proceeds at an effectiveinterest rate as high as the interest rate on the bondsbeing redeemed and might only be able to do so at asignificantly lower rate. Potential investors shouldconsider reinvestment risk in light of other investmentsavailable at that time.

Principal and interest payments will be made in U.S.dollars and will be subject to exchange rate risksand exchange controls affecting investors whoseprincipal currency is not U.S. dollars.

The State of Israel will pay principal and interest onthe bonds in U.S. dollars. This presents certain risksrelating to currency conversions if an investor’s financialactivities are denominated principally in a currency orcurrency unit other than U.S. dollars (‘‘Investor’sCurrency’’). These include the risk that exchange ratesmay significantly change (including changes due todevaluation of the U.S. dollars or revaluation of theInvestor’s Currency) and the risk that authorities withjurisdiction over the Investor’s Currency may impose ormodify exchange controls. An appreciation in the valueof the Investor’s Currency relative to the U.S. dollarwould decrease (1) the Investor’s Currency-equivalentyield on the bonds and (2) the Investor’s

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Currency-equivalent value of the principal payable onthe bonds. Government and monetary authorities mayimpose (as some have done in the past) exchangecontrols that could adversely affect an applicableexchange rate. As a result, investors may receive lessinterest or principal than expected, or no interest orprincipal.

Risks related to the State of Israeland the geopolitical and economicenvironment

Israel’s access to credit is affected by externalfactors such as regional and international politicaland economic conditions.

Israel’s access to credit in the international capitalmarkets is affected by regional and international politicaland economic conditions, including interest rates infinancial markets outside Israel, the impact of changes inthe credit rating of Israel, the security situation, theeconomic growth and stability of Israel’s major tradingpartners, and the global high-tech market. As a result,political, economic or market factors, which may beoutside Israel’s control, may impact the debt dynamicsof Israel and could adversely affect Israel’s cost of fundsin the international capital markets and the demand forIsrael’s debt securities.

Israel’s political, economic and military environmentmay continue to be volatile.

Israel has from time to time experienced politicalsituations and has been subject to ongoing securityconcerns. Since the establishment of the State of Israelin 1948, a number of armed conflicts have occurredbetween Israel and its Arab neighbors. Political instabilityin the Middle East increased after the terrorist attacks ofSeptember 11, 2001, the U.S. intervention in Iraq andnews of Iran’s reported nuclear program. Since 2005,when Israel withdrew from the Gaza strip, terroristviolence from Gaza has increased. If the level ofinstability and violence increases in the future, Israel’scapital markets, the level of tourism in Israel and foreigninvestment in Israel, among other things, may suffer. Theconflicts with Hamas in the Gaza strip and withHezbollah in Lebanon may worsen and potentially affectIsrael’s economic condition. In addition, political volatilitymay affect the stability of the Israeli economy.

Since January 2011, there has been politicalinstability and civil unrest in numerous Middle East andNorth African countries, including Bahrain, Egypt, Libya,Syria, Tunisia and Yemen. This unrest has resulted in theremoval of long-standing leadership in several of theaforementioned countries and created turbulent political

situations in others. As Israel is situated in this region, itclosely monitors these events, aiming to protect itseconomic, political and security interests. The delicaterelations between Israel and its neighbors could becomeeven more fragile with the domestic turmoil and change inregimes. Instability in the Middle East and North Africaregion have not so far materially affected Israel’s financialor political situation, and countries that have signed peaceagreements with Israel have remained committed to them,regardless of internal political developments. Nevertheless,there can be no assurance that such instability in theregion will not escalate in the future, such instability will notspread to additional countries in the region, current or newgovernments in the region will be successful in maintainingdomestic order and stability, or Israel’s economic orpolitical situation will not thereby be affected. Thisuncertainty is highlighted by continued fighting in Syria andIraq, where the Islamist militia group known as ISIS(Islamist State in Iraq and Syria) is challenging the territorialboundaries of both states. Recently, military efforts havedecreased the presence of ISIS in Syria and Iraq, but thereis growing concern regarding Shiite militias taking controlover the relinquished territory and the creation of a landcorridor from Tehran to the Mediterranean under Iranianinfluence.

Israel is a foreign sovereign state and accordingly itmay be difficult to obtain or enforce judgmentsagainst it.

Israel is a sovereign state. Although Israel haswaived its sovereign immunity in respect of the bonds,except for its sovereign immunity in connection with anyactions arising out of or based on United States federalor state securities laws, enforcement in the event of adefault may nevertheless be impracticable by virtue oflegal, commercial, political or other considerations.

Because Israel has not waived its sovereign immunityin connection with any action arising out of or based onUnited States federal or state securities laws, it will not bepossible to obtain a United States judgment against Israelbased on such laws unless a court were to determine thatIsrael is not entitled under the United States ForeignSovereign Immunities Act of 1976, as amended, tosovereign immunity with respect to such actions.

The current global economic climate and continuedeconomic disruption in Europe may have an adverseeffect on Israel’s economy.

Israel’s economy continues to be affected by currentglobal economic conditions and the slow-growth climatein the global environment, particularly in Europe. Europecontinues to face uncertainty as some ‘‘eurozone’’countries face moderate to low growth and low inflation.The continued sluggish growth in the European Union,

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which is one of Israel’s major trade partners, could have amaterial adverse impact on Israel’s balance of trade andthereby adversely affect Israel’s financial condition. Sincelate 2009, several ‘‘eurozone’’ governments, includingGreece, Spain, Italy, Ireland, Portugal, France and Cyprus,have experienced rising national debt levels coupled withthe downgrade of the credit ratings of their governmentdebt. As a result of the sovereign debt crisis in Europe,there was significant price volatility in the secondarymarket for sovereign debt of European and other nationsat the beginning of this decade. Additionally, speculationregarding the inability of Greece and other ‘‘eurozone’’governments to pay their national debts remainsuncertain, although these concerns have eased inrecent years. Another global economic condition that hashad a negative impact on the Israeli economy is theslowdown in key emerging economies, including Chinaand Brazil, which has contributed to the slowdown inIsraeli exports. The beginning of the retreat of the Board ofGovernors of the U.S. Federal Reserve System from itspast accommodative monetary policy may also influencethe Israeli economy.

Although Israel’s economy has sustained moderaterates of growth in recent years, there can be no

assurance that Israel’s economy will continue to grow ina prolonged negative global economic climate.

The successful development of Israel’s natural gasreserves involves certain risks that may makeexpected natural gas production levelsunobtainable.

There are numerous uncertainties associated withestimating quantities of natural gas reserves andprojecting future rates of production and the level ofrevenue Israel will recover from its natural gas fields.These items are, in part, dependent on the reliability ofseismic measurement technologies, the futureinternational market for natural gas and other energysubstitutes, as well as future development and operatingcosts, all of which may in fact vary considerably fromIsrael’s current assumptions concerning royalties andtax revenues. Moreover, certain of Israel’s neighboringcountries have asserted mineral rights with respect tocertain natural gas reserves to which Israel currently laysclaim. Any failure to meet expected natural gasproduction targets on the forecasted timelines, or at all,could have a negative impact on Israel’s progresstowards energy independence or the revenues that willbe received by the State of Israel.

UNITED STATES TAXATION

In GeneralThe following is a summary of the material U.S.

federal income tax consequences of the purchase,ownership and disposition of a bond. This summaryassumes the bonds were purchased by their initialpurchasers at the issue price and that such purchasershold the bonds as a capital asset for U.S. federal incometax purposes. If any of these assumptions are not correct,the purchase, ownership or disposition of a bond mayhave U.S. federal income tax consequences for aBondholder that differ from, or are not covered in, thissummary. This summary does not discuss all of the taxconsequences that may be relevant to a particular holderin light of the holder’s circumstances or to holders subjectto special rules, such as:

• Dealers in securities or currencies;

• Traders in securities that elect to use themark-to-market method of accounting;

• Financial institutions, life insurance companies andtax-exempt organizations;

• Regulated investment companies, investmentcompanies and real estate investment trusts;

• Partnerships or other entities classified aspartnerships for U.S. federal income tax purposesand persons holding the bonds throughpartnerships or other pass-through entities;

• Persons subject to the alternative minimum tax;

• Persons who hold bonds as part of a hedgingtransaction or a position in a straddle, conversion orother integrated transaction; and

• Persons whose functional currency is not theUnited States dollar.

If a partnership (including for this purpose any entitytreated as a partnership for U.S. federal income taxpurposes) is a beneficial owner of bonds, the treatmentof a partner in the partnership generally will dependupon the status of the partner and upon the activities ofthe partnership. Bondholders that are partnershipsshould consult their own tax advisors regarding the U.S.federal income tax consequences of the purchase,ownership and disposition of the bonds.

This summary does not address tax consequencesunder the laws of any U.S. state or locality, or non-U.S.jurisdiction, including Israel, nor does it address any U.S.federal taxes other than the U.S. federal income tax.Furthermore, this summary is based upon the provisionsof the U.S. Internal Revenue Code of 1986, as amended

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(the ‘‘Code’’), and the U.S. Department of Treasuryregulations (‘‘Treasury Regulations’’), administrativerulings and judicial decisions thereunder as of the dateof this prospectus supplement. These authorities maybe repealed, revoked or modified, possibly withretroactive effect, so as to result in U.S. federal incometax consequences different from those discussed below.Israel has not sought any opinion of counsel or rulingfrom the U.S. Internal Revenue Service (‘‘IRS’’) withrespect to the statements made and the conclusionsreached in this summary, and there can be noassurance that the IRS will agree with such statementsand conclusions.

Notably, in December 2017, the U.S. Presidentsigned into law the ‘‘Tax Cuts and Jobs Act,’’ whichsignificantly changes the U.S. federal income taxsystem. Although this summary takes into accountprovisions enacted under the Tax Cuts and Jobs Act,given the complexity of this new law, prospectiveBondholders should consult their own tax advisorsregarding its potential impact on the U.S. federal incometax consequence to them in light of their particularcircumstances.

We expect, and the remainder of this summaryassumes, that the bonds will not be issued with greaterthan a de minimis amount of ‘‘original issue discount’’for U.S. federal income tax purposes.

Prospective purchasers of bonds shouldconsult their own tax advisors concerning the U.S.federal income tax consequences of the purchase,ownership and disposition of the bonds in light oftheir particular circumstances, as well as the effectof any relevant U.S. state or local, non-U.S. or othertax laws.

Taxation of U.S. BondholdersU.S. Bondholders Defined. For purposes of this

summary, the term ‘‘U.S. Bondholder’’ means abeneficial owner of a bond that is:

• An individual who, for U.S. federal income taxpurposes, is treated as a citizen or resident of theUnited States;

• A corporation (or any other entity treated as acorporation for U.S. federal income tax purposes)created in or under the laws of the United States,any state of the United States or the District ofColumbia;

• An estate, the income of which is subject to U.S.federal income taxation regardless of its source; or

• A trust, if either (i) a court within the United States isable to exercise primary supervision over theadministration of the trust and one or more U.S.

persons (within the meaning of the Code) have theauthority to control all substantial decisions of thetrust, or (ii) the trust was in existence on August 20,1996 and has in effect a valid election to be treatedas a U.S. person.

Variable Rate Debt Instruments. In the case ofa Floating Rate Bond that is a ‘‘variable rate debtinstrument,’’ special rules apply. A Floating Rate Bondqualifies as a ‘‘variable rate debt instrument’’ if all of thefollowing conditions are met:

• Its issue price does not exceed the totalnoncontingent principal payments due under thebond by more than an amount equal to the lesserof (i) 0.015 multiplied by the product of the totalnoncontingent principal payments and the numberof complete years to maturity, or (ii) 15 percent ofthe total noncontingent principal payments (‘‘deminimis premium’’);

• Except as provided in preceding condition, it mustnot provide for any principal payments that arecontingent;

• It provides for stated interest compounded or paidat least annually (‘‘qualified stated interest’’) at aspecified type of rate or combination of rates, suchas one or more ‘‘qualified floating rates’’; and

• It provides for any qualified floating rate (or otherpermissible rate) to be set at the ‘‘current value’’ ofsuch rate.

A variable rate of interest is a ‘‘qualified floatingrate’’ if variations in the rate’s value can reasonably beexpected to measure contemporaneous variations in thecost of newly borrowed funds in the currency in whichthe bond is denominated. An interbank rate such as theLIBOR qualifies as a qualified floating rate. A rate subjectto certain restrictions, such as a floor, is a ‘‘qualifiedfloating rate’’ so long as such restrictions are fixedthroughout the term of the bond and are not reasonablyexpected to significantly affect the yield on the bond.

A ‘‘current value’’ is the value of the rate on any daythat is no earlier than three months prior to the first dayon which that value is in effect and no later than oneyear following that first day. Although the matter is notfree from doubt, this test should apply only on dates onwhich the rate is set or reset.

Each Floating Rate Bond provides for statedinterest that is unconditionally payable in cash at leastannually at a rate that qualifies as a single qualifiedfloating rate. Therefore, each Floating Rate Bond shouldconstitute a variable rate debt instrument, the qualifiedstated interest on which should be taxed according tothe U.S. Bondholder’s regular method of tax accountingand should not be subject to special rules applicable to

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debt instruments that do not meet the criteria set forth inthis subsection. The remainder of this discussionassumes that the Floating Rate Bonds are variable ratedebt instruments for U.S. federal income tax purposes.

Interest Payments. In general, payments oraccruals of interest on a bond will be taxable to a U.S.Bondholder as ordinary interest income at the time thatinterest accrues or is received (in accordance with theU.S. Bondholder’s method of accounting for U.S.federal income tax purposes). Interest paid or accruedon a bond generally will be treated as ‘‘foreign sourceincome’’ for U.S. federal income tax purposes and willbe classified as ‘‘passive category income’’ (or, incertain cases, as ‘‘general category income’’) forpurposes of computing the ‘‘foreign tax credit’’allowable under the U.S. federal income tax laws.

Disposition of the Bonds. A U.S. Bondholdergenerally will recognize gain or loss on the taxabledisposition of a bond equal to the difference betweenthe ‘‘amount realized’’ and the U.S. Bondholder’s‘‘adjusted tax basis’’ in the bond. The amount realizedwill be the sum of cash plus the fair market value of anyproperty received upon the taxable disposition of a bond(other than amounts representing interest that is due butthat has not yet been paid, which will be taxed asordinary income). A U.S. Bondholder’s adjusted taxbasis in a bond generally will be the purchase price ofthe bond, decreased (but not below zero) by any cashprincipal payments (if any) that a U.S. Bondholder hasreceived with respect to the bond.

Gain or loss recognized on the taxable dispositionof a bond generally will be capital gain or loss, and willbe long-term capital gain or loss if the bond was held formore than one year. Limitations apply to the ability ofU.S. Bondholders to offset capital losses againstordinary income. Any gain or loss recognized by a U.S.Bondholder on the taxable disposition of a bondgenerally will constitute income from, or loss allocableto, sources within the United States for U.S. federalincome tax purposes.

Medicare Tax. A U.S. Bondholder that is anindividual or estate, or a trust that does not fall into aspecial class of trusts that is exempt from such tax, willbe subject to a 3.8 percent Medicare tax on the lesserof (i) the U.S. Bondholder’s ‘‘net investment income’’(or, in the case of an estate or trust, the ‘‘undistributednet investment income’’) for the relevant taxable yearand (ii) the excess of the U.S. Bondholder’s modifiedadjusted gross income for the taxable year over acertain threshold (which in the case of individuals will bebetween $125,000 and $250,000, depending on theindividual’s circumstances). A U.S. Bondholder’s netinvestment income generally will include its interest

income and its net gains from the disposition of a bond,unless such interest income or net gains are derived inthe ordinary course of the conduct of a trade orbusiness (other than a trade or business that consists ofcertain passive or trading activities). U.S. Bondholdersshould consult their own tax advisors regarding theapplicability of the Medicare tax to their particularcircumstances.

Information with Respect to Foreign FinancialAssets. U.S. citizens, resident aliens and certainnon-resident aliens who own ‘‘specified foreign financialassets’’ with an aggregate value in excess of $50,000on the last day of the taxable year, or $75,000 at anytime during the taxable year generally will be required tofile an information report on Form 8938, Statement ofSpecified Foreign Financial Assets, with respect to suchassets with such owner’s U.S. federal income taxreturns. Depending on a U.S. Bondholder’scircumstances, higher threshold amounts may apply.‘‘Specified foreign financial assets’’ include any financialaccounts maintained by foreign financial institutions, aswell as any of the following, but only if they are not heldin accounts maintained by a qualifying financialinstitution: (i) stocks and securities issued by non-U.Spersons, (ii) financial instruments and contracts held forinvestment that have non-U.S. issuers or counterparties,and (iii) interests in non-U.S. entities.

The bonds may be treated as specified foreignfinancial assets and U.S. Bondholders may be subjectto this information reporting regime. Failure to fileinformation reports may subject U.S. Bondholders topenalties. U.S. Bondholders should consult their owntax advisors regarding their obligation to file informationreports with respect to the bonds.

Taxation of Non-U.S. BondholdersThis section applies to a ‘‘Non-U.S. Bondholder,’’

meaning a beneficial owner of a bond who is not apartnership for U.S. federal income tax purposes or aU.S. Bondholder as defined above.

Interest Payments. Subject to the discussion ofbackup withholding below, a Non-U.S. Bondholdergenerally will not be subject to U.S. federal income tax,including withholding tax, on payments of interest on thebonds unless the interest is effectively connected withsuch Non-U.S. Bondholder’s conduct of a trade orbusiness within the United States (or, if an income taxtreaty applies, the interest is attributable to a permanentestablishment or fixed place of business maintained bysuch Non-U.S. Bondholder within the United States). Inthat case, the Non-U.S. Bondholder generally will besubject to U.S. federal income tax in respect of suchinterest in the same manner as a U.S. Bondholder, as

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described above. A Non-U.S. Bondholder that is acorporation may, in certain circumstances, also besubject to an additional ‘‘branch profits tax’’ in respectof any such effectively connected interest incomecurrently imposed at a 30 percent rate (or, if attributableto a permanent establishment maintained by suchNon-U.S. Bondholder within the United States, a lowerrate under an applicable income tax treaty).

Disposition of the Bonds. Subject to thediscussion of backup withholding below, a Non-U.S.Bondholder generally will not be subject to U.S. federalincome tax on any gain realized on the retirement of abond, unless (1) the gain is effectively connected withthe conduct by such Non-U.S. Bondholder of a trade orbusiness within the United States; or (2) such Non-U.S.Bondholder is an individual who is present in the UnitedStates for a total of 183 days or more during the taxableyear in which that gain is realized and certain otherconditions are met.

Non-U.S. Bondholders described under (1) abovegenerally will be subject to U.S. federal income tax onsuch gain in the same manner as a U.S. Bondholderand, if such Non-U.S. Bondholder is a non-U.S.corporation, it may also be subject to the U.S. federalbranch profits tax as described above. Non-U.S.Bondholders described under (2) above generally will besubject to a flat 30 percent U.S. federal tax on the gainderived from the retirement or other taxable dispositionof bonds, which may be offset by certain U.S. sourcecapital losses (notwithstanding the fact that suchNon-U.S. Bondholder is not considered a U.S. residentfor U.S. federal income tax purposes). Any amountattributable to accrued but unpaid interest on the bondsgenerally will be treated in the same manner aspayments of interest made to the Non-U.S. Bondholder,as described above under ‘‘— Interest Payments.’’

Information Reporting and BackupWithholding

In general, information reporting requirements willapply to payments within the United States or by orthrough a custodian or nominee that is a ‘‘U.S.Controlled Person,’’ as defined below, to U.S.Bondholders (unless they prove they are otherwiseexempt) of interest on a bond and, under certaincircumstances, to the proceeds resulting from thetaxable disposition of a bond. Backup withholding willapply to those payments if the U.S. Bondholder (i) failsto provide an accurate taxpayer identification number,(ii) is notified by the IRS that it has failed to report allinterest and dividends required to be shown on its

federal income tax return or (iii) fails to certify, whenrequired, that it is not subject to backup withholding.

Non-U.S. Bondholders are generally exempt frombackup withholding and information reportingrequirements (assuming that the gain or income isotherwise exempt from U.S. federal income tax), butthey may be required to comply with certification andidentification procedures to prove their exemption. Thepayment of proceeds of a sale or redemption of a bondeffected at the U.S. office of a broker will generally besubject to the information reporting and backupwithholding rules. In addition, the information reportingrules will apply to payments of proceeds of a saleeffected at a non-U.S. office of a broker that is a ‘‘U.S.Controlled Person,’’ as defined below, unless the brokerhas documentary evidence that the Bondholder is not aU.S. person (and has no actual knowledge or reason toknow to the contrary) or the Bondholder otherwiseestablishes an exemption. A U.S. Controlled Personmeans:

• a ‘‘U.S. person’’;

• a ‘‘controlled foreign corporation’’ for U.S. federalincome tax purposes;

• a non-U.S. person 50% or more of whose grossincome is derived for tax purposes from theconduct of a U.S. trade or business for a specifiedthree-year period; or

• a non-U.S. partnership in which U.S. persons holdmore than 50% of the income or capital interests orwhich is engaged in the conduct of a U.S. trade orbusiness.

The backup withholding rules will apply to suchpayments if the broker has actual knowledge that thebondholder is a U.S. person.

Backup withholding is not an additional tax. Anyamounts withheld under the backup withholding rulesfrom a payment to a bondholder will be allowed as arefund or a credit against the bondholder’s U.S. federalincome tax liability if the required information is properlyfurnished to the IRS.

Israeli TaxationUnder Israeli law as presently in effect, payments

made under the bonds to holders who are not residentsof Israel will be exempt from Israeli taxation, and forsuch holders, there are no transfer, stamp or similartaxes under the laws of Israel payable in connection withthe issuance, transfer or sale of the bonds.

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April 13, 2018

PROSPECTUS

STATE OF ISRAEL

BONDS

The State of Israel, which may be referred to in this prospectus as Israel or the State, may offer up toU.S.$4,000,000,000 aggregate principal or maturity amount of its bonds.

Israel may offer the bonds from time to time as separate issues. Israel will provide a prospectus supplementdescribing the amounts, prices and terms of each issue of bonds it is offering. You should read this prospectusand any prospectus supplement carefully before you invest.

Israel will sell the bonds through the Development Corporation for Israel (which we may refer to as DCI in thisprospectus). With the prior written consent of Israel, DCI may utilize the services of other brokers and dealerswho are regularly engaged in the securities business and may allow reasonable concessions or commissions tosuch brokers and dealers. Israel may sell the bonds outside of the United States through additional underwritersor dealers, as will be described in the applicable prospectus supplement.

See the section entitled ‘‘Risk Factors’’ in the accompanying prospectus supplement for a discussion of certainfactors you should consider before investing in the bonds.

Neither the Securities and Exchange Commission nor any state securities commission has approved ordisapproved these securities or passed upon the adequacy or accuracy of this prospectus. Anyrepresentation to the contrary is a criminal offense.

You should rely only on the information contained or incorporated by reference in this prospectus or theapplicable prospectus supplement. Israel has not authorized anyone to provide you with different oradditional information. Israel is not making an offer of these securities in any place where the offer is notpermitted. You should not assume that the information contained in this prospectus or any prospectussupplement or any document incorporated by reference is accurate as of any date other than the date onthe front of those documents.

Development Corporation for Israel641 Lexington Avenue ⋅ New York, NY 10022-4503Member FINRA

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TABLE OF CONTENTS

Prospectus

1 Where You Can Find More Information About the State of Israel

2 Use of Proceeds

2 Description of the Bonds

5 Plan of Distribution

5 Official Statements

5 Validity of the Bonds

5 Debt Record

6 Jurisdiction; Consent to Service and Enforceability

6 Authorized Representative

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WHERE YOU CAN FIND MORE INFORMATION ABOUT THE STATE OF ISRAEL

Israel is not subject to the informationalrequirements of the Securities Exchange Act of 1934.Israel files annual reports on Form 18-K with theSecurities and Exchange Commission, or the SEC, on avoluntary basis. These reports and any amendments tothese reports include certain financial, statistical andother information about Israel and may be accompaniedby exhibits. You may read and copy any documentIsrael files with the SEC at the SEC’s public referenceroom located at the Office of Investor Education andAssistance, U.S. Securities and Exchange Commission,100 F Street, N.E., Washington, D.C. 20549-0213.Israel’s SEC filings, including the Registration Statementof which this prospectus forms a part, are also availableto the public from the SEC’s website at http://www.sec.gov. You may obtain information on the publicreference room by calling the SEC at 1-800-SEC-0330.

The Securities and Exchange Commission allowsIsrael to ‘‘incorporate by reference’’ into this prospectusthe information Israel files with it. This means that Israelcan disclose important information to you by referringyou to those other documents filed by Israel with theSEC. Information that is incorporated by reference is animportant part of this prospectus. Israel incorporates byreference the following documents:

• Israel’s Annual Report on Form 18-K for the yearended December 31, 2016, file number002-94917, as amended through the date of thisprospectus.

Israel also incorporates by reference all futureannual reports and amendments to annual reports untilit sells all of the bonds covered by this prospectus. Eachtime Israel files a document with the SEC that isincorporated by reference, the information in thatdocument automatically updates the informationcontained in previously filed documents.

You may read and copy any of these filings at theSEC’s public reference room or from the SEC’s websitereferred to above. You may also download a free copyof these filings from the Internet site maintained by DCIat www.israelbonds.com, or request a free copy ofthese filings by writing to or telephoning Israel’s ChiefLegal Officer and Head of Israel EconomicMission — Western Hemisphere, Ministry of Finance orthe DCI at the following addresses and numbers:

Ministry of FinanceGovernment of Israel

800 Second Avenue, 17th FloorNew York, New York 10017Telephone: (212) 499-5710Facsimile: (212) 499-5715

Development Corporation for Israel641 Lexington Avenue, 9th Floor

New York, New York 10022-4503Telephone: 1-888-519-4111

Email: customer.service@israelbonds.com

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USE OF PROCEEDS

Unless otherwise specified in the applicableprospectus supplement, Israel will use the net proceeds

from the sale of the bonds offered hereby for generalpurposes of the State.

DESCRIPTION OF THE BONDS

Israel will issue the bonds from time to time asseparate issues. The bonds will be issued pursuant to afiscal agency agreement between Israel and a fiscalagent, unless Israel acts as the fiscal agent with respectto any issue. If the terms or conditions described in theprospectus supplement for a particular issue of bondsdiffer from the terms or conditions described in thisprospectus, you should rely on the terms or conditionsdescribed in the prospectus supplement.

The following is a summary of certain terms of thebonds and is qualified by reference to the fiscal agencyagreement and the form of notes included therein. Israelwill describe the particular terms of any bonds in theprospectus supplement relating to those bonds. Thoseterms may include:

• the name of the issue of the bonds;

• the aggregate principal or maturity amount of thebonds;

• the price of the bonds;

• the minimum denomination of the bonds and anylimitations on amounts that may be purchased;

• the issue date of the bonds;

• the stated maturity date on which Israel agrees torepay the bonds;

• the rate of interest the bonds will accrue, if any,and, if variable, the method by which the interestrate will be calculated;

• the dates when any interest payments arescheduled to be made;

• the date or dates from which interest will accrue;

• limitations on transfer of the bonds, if any;

• whether and in what circumstances Israel mayredeem the bonds before maturity;

• under which circumstances will physical certificatesbe issued;

• the currency or currencies in which the bonds aredenominated, which may be U.S. dollars, anotherforeign currency or units of two or more currencies;

• the currency or currencies in which Israel may redeemthe bonds at maturity or upon earlier repurchase orredemption and pay any interest thereon; and

• any other terms of the bonds.

The prospectus supplement may also describe anyUnited States federal or Israeli income taxconsequences and special considerations applicable tothat particular series of bonds if applicable.

Status of the BondsThe bonds will be the direct, general and

unconditional obligations of Israel. The full faith andcredit of Israel will be pledged for the due and punctualpayment of all principal, interest and maturity amounts,as well as for the due and timely performance of all ofIsrael’s obligations with respect to the bonds.

Ranking of the BondsThe bonds will constitute direct, general, unconditional,

unsecured and unsubordinated external indebtedness ofIsrael for which the full faith and credit of Israel is pledged.The bonds of each series rank and will rank without anypreference among themselves and equally with all otherunsecured and unsubordinated external indebtedness ofIsrael. It is understood that this provision shall not beconstrued so as to require Israel to make payments underthe bonds ratably with payments being made under anyother external indebtedness.

The BondsIssuance. The bonds will be issued only in

registered form without coupons, and upon originalsubscription, in such minimum denominations as maybe set forth in the applicable prospectus supplement.Subscription for the bonds will be made on approvedforms appropriately completed and executed andaccompanied by the subscription price. Thesubscription price may be paid in United States dollarsor such other currency or currencies as Israel mayauthorize the fiscal agent to accept. A subscription isdeemed accepted as of the date when the forms andpurchase price are actually received in form acceptableto the fiscal agent and DCI.

Bond Certificates. Subject to such limitations asmay be set forth in the applicable prospectussupplement, the bonds will be issuable to any person orentity. The name of that person or entity or his, her or itsnominee will be registered in the bond registermaintained by the fiscal agent, in the case of a bookentry, or inscribed on the face of the bond, in the case

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of physical certificates. In general, bonds will be issuedonly in book-entry form. Therefore, bond certificates willgenerally not be issued. Instead, the fiscal agent willdeliver to the purchaser and owner of each bond aconfirmation that the owner has been listed in the bondregister as the registered owner of the bond along withother pertinent information. Certificates will be issuedonly to government agencies, pension funds, financialinstitutions and Employee Benefit Plans (as defined inthe applicable prospectus supplement) that so requestat the time of purchase. Certificates will be executed onbehalf of Israel by its Prime Minister and its Minister ofFinance, or by the Chief Fiscal Officer for the WesternHemisphere of the Ministry of Finance and the DeputyChief Fiscal Officer for the Western Hemisphere of theMinistry of Finance, and countersigned by an authorizedofficer of the fiscal agent, and may contain legends orrecitals not inconsistent with the fiscal agencyagreement as may be approved by the fiscal agent. Wewill forward all notices relating to the bonds to theregistered owner(s). Upon maturity of a book-entry bondor redemption of a book-entry bond, the fiscal agent willautomatically pay the principal amount and accruedinterest on the book-entry bond to the registered ownerby mailing a check to the last address of the registeredowner as listed in the bond register or making suchpayment in accordance with the direction provided bythe registered owner to the fiscal agent. Bond certificateholders must present the physical certificate to the fiscalagent to receive payment.

Payment of Interest. Some bonds areinterest-bearing. For interest-bearing bonds, interest willbe computed as provided in the applicable prospectussupplement. If the date of any payment, whether forinterest, principal, maturity or redemption, is a Saturday,Sunday or other day on which the fiscal agent isauthorized or required by law to be closed, payment willbe made on the next business day, and no interest willaccrue for the intervening period. Israel and the fiscalagent will treat the person or entity whose name isregistered in the bond register maintained by the fiscalagent, in the case of a book-entry bond, or, inscribed onthe face of the bond, in the case of a physical bond, asthe absolute owner of the bond for all purposes,including receiving payment for the bond and interestpayments, and neither Israel nor the fiscal agent will beaffected by any notice to the contrary. Payments will bepaid by check mailed to the bond owner at the addresslisted in the bond register or into a bank account held bythe owner of the bond. In the case of bonds issued inthe name of more than one holder, payment may bemade in the names of all such holders. A trustee orother legal representative will succeed to all rights of anon-individual bond owner that has dissolved or

terminated. An executor, administrator or other legalrepresentative of a bond owner who has died willsucceed to all the rights of a deceased bond owner. Ifany interest is not punctually paid, Israel will notify thefiscal agent of the amount of defaulted interestproposed to be paid on each bond and the date of suchpayment. The fiscal agent will then notify the bondowners of the proposed payment, and pay bond ownersthe defaulted interest.

Exchange and Split-up; Surrender ofBonds. There will be no exchange or split-ups ofbonds issued in minimum denominations, unlessotherwise ordered by Israel. All other exchanges orsplit-ups will be subject to reasonable regulations of thefiscal agent and Israel. The fiscal agent will cancel allbonds surrendered for transfer or exchange. The bondowner will pay all expenses, charges or taxes inconnection with any exchange or split-up.

Co-owners of Bonds. Israel or the fiscal agentmay require the signature of all bondholders in the caseof the surrender of bonds issued in the names of morethan one holder.

Lost, Stolen or Mutilated Bonds. If a bond ismutilated, lost, stolen or destroyed, then Israel mayissue a new bond upon the production of such mutilatedbond or upon evidence satisfactory to it and the fiscalagent, and, if so required by Israel, upon receipt of anindemnity and surety bond satisfactory to Israel and thefiscal agent and holding Israel and the fiscal agentharmless. If the bond was about to mature, Israel maypay for it without issuing a new bond. The newly issuedbond will constitute the original contractual obligation ofIsrael, regardless of whether any person or entity tries toenforce the old bond. The bond owner will bear allexpenses in connection with the replacement anddelivery of a new bond. Israel will issue a new bondcertificate to the bond owner for no cost, in case thebond owner notifies Israel and the fiscal agent in writingthat the bond certificate was never delivered, no laterthan six (6) months following the original issue date ofthe bond.

Early Redemption

Repurchase by Israel at the Optionof the Owner of the Bond

The bonds are subject to repurchase by Israel atthe option of the owner, under the followingcircumstances: (i) upon the death of any natural personwho was the original registered owner of the bond(‘‘Original Owner’’) or, in the event there is more thanone Original Owner, upon the death of the last survivingOriginal Owner; (ii) upon the death of the Original Owner

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or, in the event there is more than one Original Owner,upon the death of the last surviving Original Owner,where such Original Owner(s) contributed the bond to atrust of which the Original Owner(s) is(are) the solebeneficiary(ies); provided that the obligation of Israel torepurchase upon death set forth in clauses (i) and(ii) above shall cease and terminate and shall not applywhen the bond is owned by a transferee or assignee;(iii) upon the death of any natural person who ownedsuch bond through an IRA, Roth IRA or Keogh or H.R.10 Plan; provided that Israel may suspend or terminatethe obligations to repurchase on death set forth inclauses (i), (ii) and (iii) above if, in the opinion of Israel, amaterial number of these persons shall have died as aresult of war, epidemic, catastrophe of nature or otherdisaster; or (iv) upon the termination of any employeebenefit plan which owned such bond; unless, in thecase of an IRA, Roth IRA or a Keogh or H.R. 10 Plan,the beneficiary or administrator of such plan advisesIsrael or DCI that it intends to transfer such plan toanother plan in a ‘‘rollover’’ transaction, as such term isdefined in Section 402 of the Internal Revenue Code of1986, within the time limit prescribed for such‘‘rollover’’. Israel will repurchase the bonds at the optionof the owner, in connection with the events set forth inclauses (i) − (iv) above, not more than sixty (60) daysafter delivery by the owner to the fiscal agent of a writtendemand and other necessary legal documents requiredby Israel or the fiscal agent. The owner will not becharged for any expenses other than stamp taxes orother government expenses in regards to any of theabove repurchases.

Redemption at the Option of IsraelThe bonds are subject to redemption at any time at

the option of Israel, in accordance with the terms setforth in the prospectus supplement. The bonds areredeemable as a whole or in part. If the bonds areredeemed in part, selection of the bonds will be atIsrael’s discretion; however, the bonds will be redeemedin groups, where each group of bonds will consist of allbonds of the same issue bearing the same issue date. Ifinterest-bearing bonds are to be redeemed, then partialredemption can be made only on an interest paymentdate. In addition, no bonds of any issue can beredeemed at the option of Israel unless the bonds ofsuch issue having a prior issue date are or have beencalled for redemption. A notice of redemption will bemailed to all bond owners by the fiscal agent betweenthirty (30) and sixty (60) days prior to the redemptiondate. The notice will set forth:

• the redemption date;

• whether all bonds or a group of bonds are to beredeemed;

• in the case of a redemption of a group of bonds, adescription of the group of bonds that are to beredeemed;

• the redemption price;

• that on the redemption date no owner of bondscalled for redemption is entitled to more than theredemption price, and that the redemption price isdue and payable on the redemption date; and

• the place where the bonds are to be redeemed.

Whether the bonds are repurchased at the optionof the owner or redeemed at the option of Israel, Israelwill repurchase or redeem, as the case may be,interest-bearing bonds for a purchase price equal to theprincipal amount of the bond together with interiminterest accrued and unpaid to the repurchase orredemption date. Israel will repurchase or redeem, asthe case may be, non-interest-bearing bonds for apurchase price equal to the price at which the bond isdeemed issued pursuant to Section 1273 of the InternalRevenue Code, as adjusted as of the repurchase orredemption date pursuant to Section 1272 of theInternal Revenue Code, or in each case under anysuccessor provision of similar import.

If the purchase or redemption price is not paidupon the surrender of any bond, then interest-bearingbonds will continue to accrue interest at the rateprescribed for such bonds, and non-interest-bearingbonds will continue to be payable at their maturityamount on their maturity date. Israel will not be requiredto issue or register the transfer or exchange of any bondduring the period beginning on the fifteenth (15th)business day prior to the date of the mailing of a noticeof redemption through and including the date of suchmailing. Israel will also not be required to register thetransfer or exchange of any bond selected forredemption in whole or in part, except for theunredeemed portion of the bonds being redeemed inpart. No general redemption has ever been made on aprior issue. No sinking fund is required to be establishedunder the terms of the fiscal agency agreement or thebonds.

Limited TransferabilityYou may not transfer, assign or pledge the bonds,

in whole or in part, or any interest therein, and thebonds may not be securitized, except to the extent andunder the circumstances expressly indicated in theapplicable prospectus supplement or with the priorwritten consent of Israel.

If transfer is permitted under the terms of theapplicable prospectus supplement, the bond owner willnot be charged for any expenses other than stamp taxes

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or other government expenses with regard to the transferof bonds to Israel or upon the death of the bond owner.The bond owner will be responsible for all charges,expenses and taxes with regard to any other transfer. To

transfer or assign a bond, if permitted, the bond ownermust surrender the bond to the fiscal agent, together witha written instrument of transfer and any other documentsrequired by Israel or the fiscal agent.

PLAN OF DISTRIBUTION

Israel has entered into an Underwriting Agreementwith DCI. The principal terms of the UnderwritingAgreement with DCI are as follows:

• DCI is the sole and exclusive underwriter of thebonds in the United States and has agreed to useits best efforts to sell the bonds.

• DCI will receive a selling concession at a rate to bedetermined from time to time by Israel and DCI. Theamount of the selling concession will not exceed6% of the purchase price of the bonds sold.

• DCI will use its best efforts to sell the entireauthorized issue of the bonds; however, there is noassurance that all the bonds will be sold.

Israel may sell the bonds outside of the UnitedStates through additional underwriters or dealers, as willbe described in the applicable prospectus supplement.

Israel will pay all charges, expenses and fees inconnection with the issuance of the bonds, theregistration of the bonds under the applicable federaland state securities laws, the preparation, printing,authentication, delivery, publication and distribution of

prospectuses, newspaper prospectuses, advertising,literature, collection of subscriptions, publicpresentations, maintenance of complete and accuraterecords of all bond transactions, any payments to thefiscal agent in connection with the issuance of thebonds pursuant to any fiscal agency agreement or inconformity with its provisions, and all taxes and stampsrequired in connection with the sale of the bonds.

This prospectus and the prospectus supplementrelating to a particular issue of bonds may also beavailable in electronic format on the website maintainedby DCI at www.israelbonds.com. Customer InformationForms and Investment Forms will also be available toprint from the DCI website. Customer InformationForms and Investment Forms must be printed,completed and returned to DCI. Other than thisprospectus, the prospectus supplement and any freewriting prospectus relating to a particular issue, anyinformation on the website is not part of the prospectus,has not been approved or endorsed by Israel or DCI andshould not be relied upon by investors.

OFFICIAL STATEMENTS

Information included herein and in the RegistrationStatement which is identified as being derived from apublication of Israel or one of its agencies orinstrumentalities or the Bank of Israel is included on theauthority of such publication as a public official

document of Israel or the Bank of Israel. All otherinformation herein and in the Registration Statement isincluded as a public official statement made on theauthority of the Accountant General of the Ministry ofFinance of Israel, in his or her official capacity.

VALIDITY OF THE BONDS

The validity of the bonds will be passed upon forIsrael by Arnold & Porter Kaye Scholer LLP, UnitedStates counsel to the State of Israel, and by the LegalAdvisor to the Ministry of Finance of the State of Israel.As to all matters of Israeli law, Arnold & Porter Kaye

Scholer LLP may rely on the opinion of the Legal Advisorto the Ministry of Finance. All statements with respect tomatters of Israeli law in this prospectus have beenpassed upon by the Legal Advisor to the Ministry ofFinance and are made upon his authority.

DEBT RECORD

Israel has never defaulted on the payment ofprincipal, maturity amount or interest on any of its

internal or external indebtedness.

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JURISDICTION; CONSENT TO SERVICE AND ENFORCEABILITY

The State of Israel is a foreign sovereigngovernment. Consequently, it may be difficult to sueIsrael or to collect upon a judgment against Israel. Israelwill irrevocably agree not to assert any defense basedon immunity, including foreign sovereign immunity, fromjurisdiction to which it might otherwise be entitled in anyaction arising out of or based on the terms of the bondswhich may be instituted by the owner of any bonds ofany issue in any federal court in the Southern District ofNew York, any state court in the City of New York or inany competent court in Israel.

Israel has appointed the Chief Legal Officer and Headof Israel Economic Mission — Western Hemisphere,Ministry of Finance of the Government of Israel in NewYork, New York, as its authorized agent upon whomprocess may be served. This appointment is limited to anyaction arising out of or based on the bonds that the ownerof any bonds may institute in any federal court in theSouthern District of New York or any state court in the Cityof New York. The appointment will be irrevocable until

Israel pays all amounts due or to become due on or inrespect of all the bonds issuable under the fiscal agencyagreement. If for any reason the authorized agent ceasesto be able to act as Israel’s authorized agent or no longerhas an address in New York, Israel will appoint anotherperson in New York as its authorized agent.

The Chief Legal Officer and Head of Israel EconomicMission — Western Hemisphere, Ministry of Finance is notthe agent for service for actions under the United Statesfederal securities laws or state securities laws and Israel’swaiver of immunity does not extend to such actions.Because Israel has not waived its sovereign immunity inconnection with any action arising out of or based onUnited States federal or state securities laws, it will not bepossible to obtain a United States judgment against Israelbased on such laws unless a court were to determine thatIsrael is not entitled under the Foreign SovereignImmunities Act of 1976 to sovereign immunity withrespect to such actions. Under the laws of Israel, assets ofIsrael are immune from any form of execution.

AUTHORIZED REPRESENTATIVE

The Authorized Representative of the State of Israelin the United States of America is the Chief Legal Officerand Head of Israel Economic Mission — Western

Hemisphere, Ministry of Finance of the State of Israel,whose address is 800 Second Avenue, 17th Floor,New York, New York 10017.

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