Consult this publication on line at

7. Conclusions and recommendations
i)
Germany has a robust, well-developed system of federal budgeting which
commands the confidence and respect of key institutional stakeholders.
The Federal
Ministry of Finance, line Ministries, the Federal Chancellery, parliamentary participants
and external experts note that the budgeting system is consistent with sound overall
macroeconomic management, and with democratic oversight and accountability. The
system exhibits some features of an ongoing transition towards a full top-down budgeting
approach. 
ii) The debt brake, introduced in 2010, is already well-understood among federal
budgeting institutions as an over-arching fiscal rule within which budgetary
management is conducted.
The rule is well-regarded among institutional players as
providing assurance that the public finances will be managed soundly over the medium
term. For it to be effective as a guarantor of fiscal prudence, the following conditions will
need to be met:
●
the rule will need to be enforced rigorously during all stages of the economic cycle;
●
the rule will need to be applied uniformly across all levels of government, in line with the
established multi-annual timescale. The public finances of the Länder are very

---

BUDGET REVIEW: GERMANY
OECD JOURNAL ON BUDGETING – VOLUME 2014/2 © OECD 2015
72
heterogeneous, and fiscal relations across levels of government will need to be monitored
carefully to ensure that potential incorrect incentives are managed. The new Stability
Council will likely prove to be a useful forum for discussing and co-ordinating such fiscal
relations, although it has very limited formal powers to impose discipline on its
individual members.
iii) Top-down budgeting, a necessary complement to the debt brake, has