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Fiscal surveillance by the Stability Council
The Stability Council usually meets in May and December each year. It is chaired jointly
by the federal minister of finance and the chair of the 
Länder
conference of finance
ministers. Decisions of the Council are in practice consensual, with resolutions requiring
the votes of two-thirds of the Länder and that of the federation; although individual 
Länder
are excluded from voting on resolutions affecting them. Decisions affecting the Federation
require a majority of two-thirds of all voting members.
In advance of the annual December meeting, each government entity (federation or
Land
) must submit a “stability report” covering a 7-year time horizon: the previous 2 years,
the current year and the following four years. In line with Article 3 of the Stability Council
Act, the report contains a fixed set of indicators to allow for comparable monitoring of the
current budgetary situation, debt-brake compliance and the medium-term budgetary
outlook using standard assumptions. 
The stability report uses 4 fixed indicators (which were determined by the Council itself),
as follows:
1. Structural fiscal balance per capita
2. Credit financing ratio (net borrowing as % expenditure)
3. Debt level per capita
4. Interest-to-tax ratio (interest expense as % of tax revenue)
For each of these indicators, threshold values are in place for the federation (based on
compliance with its own fiscal rule) and for the 
Länder
(based on a maximum deviation
from the average values). These indicators are monitored for each government entity and
they are the primary basis for a qualitative assessment of whether a “budgetary emergency”
is in place or in prospect; in such cases, a budget rehabilitation procedure must be agreed
by the Council in respect of that government entity, including a programme for reduction
of net borrowing by that entity. At its meeting in May 2011, the Stability Council determined
that a budgetary emergency was threatened in the case of four 
Länder
(Berlin, Bremen,
Saarland and Schleswig-Holstein), and accordingly the stability reports of these 
Länder
are
formally reviewed by the Council for compliance with the budgetary targets. In December
2013, the Stability Council noted that the rehabilitation programmes remained on course
for two of these 
Länder
, but it called upon Bremen and Saarland to step up their fiscal
correction efforts.

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the Council is supported with high-level professional economic capacity. Moreover, given
the nature of the Council and the constitutional standing of its constituent members, it is
not appropriate for the Council to be dependent solely upon the Federal Ministry of Finance
or of Economics in this regard. Accordingly, an expert economic panel has been established
since July 2013 to provide such a role, drawing membership from the established networks
of independent economic institutions and from the various levels of government. The Chair
of this expert panel participates as a speaking observer at meetings of the full Stability
Council. Further information about the expert economic panel is set out in Section 4.1.
It should also be noted that there is at present no single accounting standard in place
for public budgeting across levels of government in Germany: some 
Länder
use accrual
forms of accounting, while others and the federation use a cash-based approach. Nevertheless
the comparability of data used for the national accounts, finance statistics or by the
Stability Council (see Box 7 above) is ensured by Section 49b of the Budgetary Principles
Act, which requires the provision of detailed comparable data.