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14. Overall, Germany’s top-down budget framework provides a solid basis for
determining financial allocations and maintaining their continuity through the
medium-term, consistent with the requirements of the budget constraint.
Ongoing and
future reforms should aim at counter-balancing the strong bureaucratic momentum of
the multi-annual allocations with enhanced opportunities for review, re-evaluation and
re-prioritisation of the baseline allocations. Periodic spending reviews, as practised in several
OECD countries, could play a useful role in this regard, and indeed a commitment to this
type of reform has been included in the Coalition Agreement of the current government.
Renewed attention to the performance aspects of budget allocations, in particular as they
relate to government strategic objectives, would progress the budget accountability
process beyond its current focus on detailed financial allocations. A Citizen’s Budget
showing the “big picture’ of what the budget is intended to accomplish would enhance
transparency for citizens, and may also foster a stronger engagement among all
stakeholders – including in parliament – upon the outcomes and impacts of budgeting.
1. Budget institutions and processes
1.1. The legal context
Germany is a federal parliamentary republic, with laws and key institutions of state
grounded upon a 
Basic Law
(
Grundgesetz
). This Basic Law lays down certain fundamental
requirements of the budget process, and prescribes the fiscal relationship between the
federation (i.e. the federal level of government) and the state regions (
Länder
) which enjoy a
high level of autonomy. The 
Länder
also participate in the legislative process of the federation
through their representation in the 
Bundesrat
(upper house of the bicameral legislature).
Some key aspects of the national budgeting system as set out in the Basic Law are:
●
The federation and the 
Länder
are autonomous on managing their budgets, which should
in principle be balanced, and they must work jointly to fulfil EU-related obligations as
regards fiscal discipline.

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OECD JOURNAL ON BUDGETING – VOLUME 2014/2 © OECD 2015
13
●
Each level of government (federal and 
Land
) should in principle finance its own expenditure,
although there are specified grounds upon which financial aid may pass from the federal
to 
Land
level.
●
Within the federal government, each ministry is independently responsible for the conduct
of its own affairs.
●
Principles are laid down for the raising of specific forms of taxation, and the apportionment
of taxation, at federal and 
Land
levels.
●
The “debt brake” rule to strengthen and operationalise the balanced-budget principle is
also included (since 2009) in the Basic Law.
Budgeting matters are specified in more detail in the body of primary and secondary
legislation, as listed below. 
●