Budgetary Surveillance for the Avoidance of Budgetary Emergencies

Under Article 109a of the Basic Law (Grundgesetz) and section 3 of the Stability Council Act (Stabilitätsratsgesetz), monitoring the budgets of the Federation and Länder on a regular basis is one of the Stability Council’s central tasks.

This monitoring is performed on the basis of annual stability reports which the Federation and the Länder submit to the Stability Council.

The stability reports provide forecasts of medium-term budget trends and contain indicators specified by the Stability Council that are used to assess the budgetary situation. The reports also provide information about the respective level of government’s compliance with constitutional limits on borrowing. If the indicators or forecasts point to the risk of a budgetary emergency, the Stability Council initiates a comprehensive review of the affected budget in accordance with section 4 of the Stability Council Act. If the outcome of this review shows that a level of government is actually at risk of a budgetary emergency, the Stability Council agrees a budget adjustment programme with the affected level of government, in accordance with section 5 of the Stability Council Act. Compliance with the budget adjustment programme and implementation of the measures agreed to achieve consolidation are monitored by the Stability Council on an ongoing basis.