Claim: A loss of supply can require a prime minister to resign immediately.

Loss of supply occurs where a government in a parliamentary democracy using the Westminster System or a system derived from it is denied a supply of treasury or exchequer funds , by whichever house or houses of parliament or head of state is constitutionally entitled to grant and deny supply . A defeat on a budgetary vote is one such way by which supply can be denied . Loss of supply is typically interpreted as indicating a loss of confidence in the government . Not all `` money bills '' are necessarily supply bills . For instance , in Australia , supply bills are defined as `` bills which are required by the Government to carry on its day-to-day business '' .   When a loss of supply occurs , a prime minister is generally required either by constitutional convention or by explicit constitutional instruction to either resign immediately or seek a parliamentary dissolution .   Some constitutions , however , do not allow the option of parliamentary dissolution but rather require the government to be dissolved or to resign .   A similar deadlock can occur within a presidential system , where it is also known as a budget crisis . In contrast to parliamentary systems , the failure of the legislature to authorize spending may not in all circumstances result in an election , because some such legislatures enjoy fixed terms and so can not be dissolved before a date of termination , which can result in a prolonged crisis .   A deadlock between a head of state and the legislative body can give rise and cause for a head of state to prematurely dismiss the elected government , requiring it to seek re-election . If a government maintains the support of a majority of legislators or the elected parliamentary representatives , the blocking of supply by a head of state would be seen as an abuse of authority and power . Many western countries have removed or restricted the right of a head of state to block supply or veto a government budget unless there is overwhelming justification and cause for such action .