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1.3.3. Top-down budgeting: assessment
In Germany’s case, the top-down budgeting approach makes for an orderly and
efficient conduct of the budget process, with clear visibility from an early stage in the
process as to the level of resources available to line ministries. Taken together with the
medium-term aspects of budgeting (discussed in the next section), this should in principle
allow for budget negotiations to focus upon how to make best use of available resources,
with less time dedicated to special pleading for additional resources.
Indeed, most actors within the budget system – including within the central and line
ministries – accept that the move to top-down budgeting has brought about a fundamental
shift in the balance of power between the Federal Ministry of Finance and the other
ministries. The previous “bottom-up” system of budgeting allowed more power to the line
ministries, or to the “demand side” of the budget process; nowadays, it is clear that line
ministries must prioritise to a greater extent within their annual allocations and their
multi-annual plans; whereas fiscal policy is now the determinant, rather than the resultant,
of the sector-specific programmes. On the other hand, within their spending envelope, line
ministries nowadays have greater freedom, and indeed greater responsibility, to decide on
their allocations than in the past.
In more general terms, one criticism that can be levelled at the top-down budgeting
approach is that, while finance and economic ministries may see the case for the primacy
of macro-fiscal rectitude, it may not be obvious to other ministries or to the public in general
why fiscal policy should take precedence over health, education or other aspects of social
and economic policy, in particular in times of retrenchment when difficult and sensitive

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choices fall to be made. Nevertheless it seems clear that, in Germany at least, a very high
value is placed upon the virtue of fiscal soundness and stability, and the pre-eminence of
macro-fiscal policy is not seriously disputed among other line ministries. Indeed, the fact
that the Basic Law was amended in 2009 to put the debt brake rule on a constitutional
footing – something which required the approval of two-thirds of the parliament – provides
a democratic mandate for budgets to be framed within a clear fiscal constraint.
It should be noted however that top-down budgeting, while in many respects a defining
characteristic of modern budgeting in Germany, and arguably a necessary operational
complement of the fiscal rule, is not at present reflected in the legislative framework (which
regulates so many other aspects of the budget process). This omission is something that
policy-makers may wish to address, to ensure firm and enduring legitimisation of this aspect
of budgetary governance.
A related point is that top-down budgeting and fiscal planning depend, for their continued
effectiveness, on the accuracy and reliability of budgetary forecasting including those forecasts
being brought forward by the line ministries during the technical budget preparation stage.