Compliance with the EU Requirements for Budgetary Discipline
In accordance with section 6 of the Stability Council Act, the Council monitors the budgets of the Federation, Länder, local authorities and social insurance funds, to make sure that these, taken together, comply with the upper limit for the general government structural deficit of 0.5% of national gross domestic product, as laid out in section 51 subsection (2) of the Budgetary Principles Act. This ensures that Germany complies with the relevant provisions of the Fiscal Compact and the EU Stability and Growth Pact.
The Stability Council reviews compliance with the upper limit for the general government structural deficit twice annually on the basis of estimates of the deficit for the current year and the four subsequent years. If the upper limit is or will be exceeded, the Stability Council recommends appropriate consolidation measures to the governments and parliaments of the Federation and the Länder. In performing these tasks, the Stability Council receives assistance from an independent advisory board (Beirat), in accordance with section 7 of the Stability Council Act.
The Council coordinates budgetary and financial planning on the different federal levels as per section 51 subsection (2) of the Budgetary Principles Act. It took this role over from the Financial Planning Council in 2010. The Stability Council is charged with ensuring that Germany fulfils its duties with regard to compliance with budgetary discipline as stipulated in the EU Stability and Growth Pact. The Stability Council was given the task of monitoring compliance with the upper limit on the general government structural deficit in 2013, when national legislation was introduced that implemented the Fiscal Compact. This legislation explicitly formulated and significantly expanded the Stability Council’s mandate with regard to compliance with EU requirements for ensuring budgetary discipline.