II - Changes to the Budgetary Process

Budgetary process       
Describe the main characteristics of the budgetary process (cycle, actors, instruments, etc.) in Germany.


The legal basis for the budgetary process on the federal level in German is Article 110 Grundgesetz (GG).


The yearly federal budgetary process is determined by the budget law and the budget plan. The budget plan contains all the expenses and revenues of every federal authority and is annexed to the budget law. In order to assemble the budget plan the budget units in the federal ministries and the supreme federal authorities have to develop drafts of their budget plan for the next budgetary year which have to make sure that expenses and revenues are balanced. The Federal Finance Ministry collects all the drafts and assesses whether they are in line with the tax estimation.


When the Finance Ministry has combined and approved all the drafts, the Federal government adopts the budget plan. Usually, the outline of the budget plan is published in the summer prior to the next budgetary year. The draft of the budget plan is sent simultaneously to the Bundestag und the Bundesrat, a requirement of Article 110 (3) GG. The draft budget plan is assessed in light of another budget plan which covers several fiscal years (usually five years). Within sex weeks the Bundesrat comments on the draft of the yearly budget plan. The comment of the Bundesrat is sent to the Bundestag along with a statement of the Federal Government to the Bundesrat’s comments.


Like every other federal law, the budget law and the annexed budget plan require three readings in the Bundestag. However, the procedure is partly different from other legislative procedures. The first reading in plenary is mainly the presentation of the budget plan accompanied by discussions between the government and the opposition in parliament which end with the referral of the budget law (including the annexed budget plan) to the Budget Committee of the Bundestag. The Committee looks intensively at every budgetary position and gives recommendations. The recommendations of the Committee are presented to the Bundestag in its plenary composition. They are subject to the second reading. During the second reading, every single budget plan of the whole budget plan, for example for a single ministry, must be adopted separately. During the third reading, the budget law annexed with the budget plan as a whole must be adopted.


After the adoption by the Bundestag, the budget law is sent to the Bundesrat which has the right to refuse the law and call for a mediation in the Conciliation Committee. If the Bundesrat agrees with the draft budget law, the Federal Finance Minister, the Chancellor and the Federal President sign the law and it is published in the Federal Law Gazette. Within the time indicated in the law, it enters into force.


The Federal budget is permanently supervised by the Accounting Committee, a sub-committee of the Bundestag’s Budget Committee. In addition, the Federal Court of Auditors controls how the public spending was carried out and publishes remarks which are important for the Bundestag when it comes to the decision about the formal approve of the Federal Government.


General change   
How has the budgetary process changed since the beginning of the financial/Eurozone crisis?


Before the Eurozone crisis there were no specific laws determining how financial assistance to Member States of the EU can be granted. Discussions in Parliament and Constitutional Court Decisions have led to a law which lays down the requirements for financial assistance for Member States in the framework of the ESM in the ESM Financing Act (ESM-Finanzierungsgesetz, briefly ESMFinG). According to this law it is in general the Budget Committee of the Bundestag which decides about financial assistance (§ 5 ESMFinG). The law also defines in which cases an approval of the Budget Committee is necessary before the German representative in the ESM can vote in favour of an ESM proposal or abstain. As long as there is no approval by the Budget Committee or the Plenary the German representative has to refuse the proposal.


The Budget Committee is not authorized to vote about an ESM proposal when the overall budgetary responsibility of the Bundestag is concerned. In this case, the Bundestag as a plenary has to decide (§ 4 ESMFinG). One of the most controversial norms concerns the special Committee, a sub-Committee of the Budget Committee. While the Budget Committee consists of around 40 MPs, the special Committee has around 9 MPs. According to § 6 ESMFinG it is only competent when there is a proposal to buy government bonds at the secondary market (Art. 18 TESM). Only in this case it is necessary to restrict the information to a reduced number of MPs in order to guarantee secrecy of the decision.


Institutional change 
What institutional changes are brought about by the changes in the budgetary process, e.g. relating to competences of parliament, government, the judiciary and independent advisory bodies?


In relation to decisions about financial assistance for Member States the Act on the Financing of the ESM contains rules for the distribution of competences (see question II.2). In addition, the Stability Council (Stabilitätsrat) has received more competences (see questions VII.5 and IX.4).



Change of time-line    

How has the time-line of the budgetary cycle changed as a result of the implementation of Euro-crisis law?

The budgetary circle has not changed as a result of the implementation of Euro-crisis law.


What other information is relevant with regard to Germany and changes to the budgetary process?


No other relevant information.