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Budgetary Principles Act
(Act on the Principles of Federation and 
Länder
Budgetary
Law) – 
Haushaltsgrundsätzegesetz
(
Gesetz über die Grundsätze des Haushaltsrechts des Bundes
und der Länder
): This fundamental piece of legislation establishes the principles of
budgeting with which the federal and 
Länder
budget rules must comply. Among the
principles are financial sufficiency and necessity; annuality; efficiency and economy;
and universality (see also Box 1– Principles of Budgeting in Germany). The Act allows for
either cash or double-entry accounting systems to be used, and permits carryover and
virement of expenditures in certain circumstances. It prescribes that the budget be
allocated by departments, which in turn are divided into chapters and titles. The Act also
envisages “commitment appropriations”, i.e. authorisations which involve a commitment
to spend money in future years (beyond the budget year) – such appropriations require
the prior consent of the respective Ministry of Finance. 
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Federal Budget Code
– 
Bundeshaushaltsordnung:
This document applies the Budgetary
Principles Act to the budget of the federation, and thus provides the basis for the annual
procedure for presenting and authorising the budget, as well as budget implementation
and maintaining and auditing accounts. There are additional specifications for
virement, and a requirement that the annual budget be accompanied with a “finance
report” i.e. a report on the current state of the public finances and their outlook. The
Code also provides for the “blocking’ of certain budget items, so that they may not be
drawn down for expenditure without express authorisation from the Federal Ministry of
Finance.
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Act to promote economic stability and growth
– 
Gesetz zur Förderung der Stabilität und des
Wachstums der Wirtschaft:
The Act, which dates from 1967, lays down a principle that
federal and 
Land
budgets shall “observe the requirements of overall economic
equilibrium”. It provides 
inter alia
that the Federal Government present an annual economic
report to the 
Bundestag
in January of each year, which should include a response to the
most recent Annual Report from the Council of Independent Economic Experts. An
important feature of the Act is the stipulation that the federal budget be managed on the
basis of a rolling five-year planning period, and that a Financial Plan be set out each year
by the Federal Ministry of Finance. This Act also envisages that a reserve fund be
established for counter-balancing cyclical fluctuations, a provision that has been disused
and is now superseded by the debt brake provisions. 
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