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1.5.1. Flexibility within the budget implementation phase
Budget allocations are annual, not multi-annual, and managers are expected to use
their allocated resources within the year towards the stated purposes. Moreover, there is a
strong expectation that funds allocated will not be exceeded, and in practice the number
of supplemental appropriations is limited. Authorisation of such supplemental
appropriations by the Federal Ministry of Finance is not a routine matter: the additional
funds may be authorised only if there is an “unforeseen and compelling need” and in cases
specified by law after first informing the Budget Committee of the 
Bundestag
.
However, the German system includes some additional flexibility for funds to be
re-allocated within the year (
virement
) and for funds to be carried over from one year to the
next, subject to restrictions as explained below.

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BUDGET REVIEW: GERMANY
OECD JOURNAL ON BUDGETING – VOLUME 2014/2 © OECD 2015
27
Virement:
Although Germany’s budget system uses a large number of individual line
items,
2
budget managers within departments may transfer funds within administrative
groupings of expenditure as designated in the budget document. These groupings relate to
personnel expenditure, non-personnel administrative expenditure, and various categories
of capital expenditure (
viz.
construction works, large-scale investment, and other capital
expenditure). In practice, there is virtually unlimited scope for such 
virement
within the
same grouping, and there is a 20% leeway for 
virement
across groupings (provided all are
within the same “chapter” of the departmental budget). Such 
virements
, which are provided
for under Section 20 of the Federal Budget Code, do not as a rule require advance approval of
the Federal Ministry of Finance, although unforeseen 
virements
beyond these limitations
and across different chapters are subject to advance approval. 
In practice, therefore, the large number of budgetary line items – a legacy of the
bottom-up tradition of budgeting – is counter-balanced with flexibility mechanisms. The
high level of detail represents a significant bureaucratic overhead compared with the
approach taken in several other OECD countries, where a radical consolidation and
streamlining of line items over the years has significantly reduced the need for 
virement
,
allowing managers to pay more attention to non-financial information on performance
and results. While the additional financial detail is not without its compensating benefits –
for example in terms of maintaining a close oversight of budget execution – there is a case
for re-considering the balance and type of data being used in Germany’s case, as the top-
down budgeting approach becomes “bedded in”.