Budget of Germany explained

The public sector budget of Germany is divided among the administrative divisions of the country.

The Federal Statistical Office of Germany breaks down the 2023 general government budget into the following categories:[1] [2] [3]

Item Central Government Social SecurityRegional and local GovernmentEU shares
Revenues
(billion €)
526.2 820.7 887.3 34.2
Expenditures
(billion €)
613.9 818.0 894.3 34.2
Balance
(billion €)
-87.6 2.7 -7.0 0.0

The International Monetary Fund reports Germany's government revenue and expenditure amounted to 47.0% and 49.5% of GDP in 2022.[4]

In terms of accounting period, the national government's fiscal year aligns with the calendar year (1 January to 31 December).

Since 2009, Germany has a balanced budget amendment in its Constitution, which restricts annual structural deficits to 0.35% of GDP.[5] [6] [7]

Purpose

The primary purpose of the budget is to create an overview of the country's revenues and expenses for the following fiscal year or years. Since the budget is based on past expenditures, it is merely a prediction of the future which can lead to unexpected budget deficits as the fiscal year progresses. In the short term, such deficits are commonly financed by borrowing money which has led to the significant long-term debt of the German federal government.

Procedure

The Bundestag passes the budget as an addendum to the annual or bi-annual budget act (Art. 110, Basic Law). Revenues and expenses are separated by ministries and other administrative entities.

Budget guidelines

Specific guidelines established by law govern the creation of the budget. Specifically, these are:

  1. Completeness: the budget must include all instances of revenues and expenditures separately.
  2. Clarity: the budget must be organized along ministry and functional lines.
  3. Unity: the budget must include all revenues and expenditures
  4. Accuracy: revenues and expenditures must be estimated based on actual fair market value or expected values. To avoid manipulations, such estimates are conducted by a separate official body.
  5. Historical Succession: the budget must be enacted before the fiscal year starts. If there is no budget for the current fiscal year, the previous budget continues in effect.
  6. Specificity: expenditures must be designated as falling into a specific area, at a specific time, and at a specific level.
  7. Publicity: all debates on the budget in the Bundestag as well as the final enacted budget are publicly available and accessible. Some expenditures, however, may be classified with appropriate restrictions on who can access information on those.

Example budget

The federal budget for 2021 is €369.3 billion.[8] With total government spending of €1.76 trillion in 2021, the federal budget comprises only a fraction of total public sector spending in Germany.[9]

Germany's budget for the 2005 fiscal year can be found below, which also outlines the basic budget structure.

FunctionDescriptionExpenditures
01Federal President23,636
02Bundestag550,920
03Bundesrat19,952
04Federal Chancellor1,510,084
05Federal Foreign Office2,205,783
06Ministry of the Interior, Building and Community4,216,641
07Ministry of Justice and Consumer Protection338,592
08Ministry of Finance4,041,769
09Ministry for Economic Affairs and Energy37,974,665
10Ministry of Food and Agriculture5,106,957
12Ministry of Transport and Digital Infrastructure23,255,509
14Ministry of Defence23,900,000
15Ministry of Health 84,409,880
16Ministry of Environment, Natural Conservation and Nuclear Security769,024
17Ministry for Family Affairs, Senior Citizens, Women and Youth4,571,691
19Federal Constitutional Court17,631
20Federal Auditing Office86,668
23Ministry for Economic Cooperation and Development3,859,093
30Ministry for Education and Research8,540,422
32Federal Debt40,431,841
33Support8,821,008
60General Financial Administration(261,766)
Total: 254,300,000
Notes

External links

Notes and References

  1. Web site: Revenue of the overall public budget 2022 and 2023. Statistisches Bundesamt. 2024-04-05. 2024-07-13.
  2. Web site: Expenditure of the overall public budget 2022 and 2023. Statistisches Bundesamt. 2024-04-05. 2024-07-13.
  3. Web site: Financial balance of the overall public budget 2022 and 2023. Statistisches Bundesamt. 2024-04-05. 2024-07-13.
  4. Web site: Germany: Datasets. International Monetary Fund. 2024. 2024-07-13.
  5. News: 2024 . Germany’s debt brake and the art of fantasy budgeting . The Economist . 0013-0613.
  6. News: 2024-07-13 . Meet the Economist Leading Germany’s Battle Against Debt . Bloomberg.com . en.
  7. Web site: 2023 . What is Germany's debt brake? . DW . en.
  8. Web site: Draft 2019 budget and financial plan to 2022: Forward-looking, fair and responsible - Federal Ministry of Finance - Press.
  9. News: Expenditure of the overall public budget: 2021 and 2022. Federal Statistical Office of Germany. 2023-04-05 . 2023-12-03.