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xii) Fiscal risks, which might endanger compliance with the fiscal rule over time,
should be systematically identified and managed
, drawing upon the extensive
information that is already available throughout the budgetary cycle. This is particularly
relevant in the case in the 
Länder
where the traditions of budgetary prudence and stability
are not uniform, and where incentives could potentially arise to use non-transparent
financing mechanisms, in a context where the scope for more traditional financing has
become more constrained. More generally, while the benefits of the new top-down

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BUDGET REVIEW: GERMANY
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75
budgeting system and the debt brake seem to be well appreciated, the potential risks and
unintended opportunities for “gaming” the system are not yet well-understood, and
should be addressed through stronger institutional prudence and caution over coming
years. It is possible that the Stability Council, and its expert advisory panel, could play a
role in the identification, discussion and management of fiscal risks arising across the
various levels of government.
Notes 
1. The Federal Ministry of Economics & Energy was constituted as such in late 2013; its predecessor
was the Federal Ministry of Economics and Technology. This Ministry will generally be referred to
as the Federal Ministry of Economics for convenience in this Report.
2. The federal budget contains approximately 6 600 line items, of which about 5 500 are expenditure-
related; and of these in turn, about 3 000 may be subject to virement.
3. The new EU economic governance rules, which build upon the pre-existing EU Treaty provisions
and the Stability & Growth Pact, are set out formally in a series of five Regulations and one
Directive adopted in 2011 (the “six pack”) and two further regulations adopted in 2013 of primary
relevance to euro-area countries (the “two pack”). Further related commitments are set out in
other instruments and agreements, notably the inter-governmental Fiscal Compact Treaty which
entered into force in 2013 and is currently applicable to 25 of the 28 EU countries. 
4. See A. Lübke, “Fiscal Discipline between levels of Government in Germany”, 
OECD Journal on Budgeting
,
Vol. 5 No. 2 (2005).
5. The officials servicing the Council, who include officials from the municipalities and the Bundesbank
as well as from the federal and Länder levels, meet on a more regular basis, at least three times a year.
6. In 2006, the Constitutional Court disallowed federal assistance to Berlin, in part because it did not
consider that Berlin had taken sufficient measures of its own to address its budgetary difficulties.
7. The Coalition Agreement for the current German government was agreed between the political