24 October 2012

BFM: Sixth meeting of the German Stability Council

On 24 October 2012, Germany's Stability Council convened in Berlin under the joint chairmanship of Federal Finance Minister Wolfgang Schäuble and Harmut Möllring, the Finance Minister of North Rhine-Westphalia, representing the chair of the Länder Finance Ministers' Conference.

The Federation, Länder and the municipalities have used the continuing buoyant income situation to reduce their financial deficits. The Stability Council stressed that consolidation efforts must be pursued resolutely to ensure that the requirements of Germany's constitutional budget rule can be met on a lasting basis, as well as to safeguard the long-term viability of public budgets.

The Stability Council emphasised the responsibility of the Federation and the Länder in terms of compliance with the conditions set out in the reformed Stability and Growth Pact and the European Fiscal Compact.

As part of regular budgetary surveillance, the Stability Council assessed the budgetary situation of the Federation and the Länder using an indicator-based analysis that is founded on the stability reports which they produce. In the case of the Federation and those Länder which do not have budget rehabilitation programmes this showed that there were no signs of a budgetary emergency.

Stability reports were submitted by the Länder which currently have such programmes (Berlin, Bremen, Saarland and Schleswig-Holstein). The reports set out how they will reduce their annual net borrowing further in the period from 2012 to 2016. The Stability Council assessed the reports and welcomed the continuation of their current consolidation strategies. The Stability Council indicated that even though the income trend remains positive, consolidation must continue to be pursued resolutely and discipline over spending maintained.

The Stability Council discussed the progress reports produced by the eastern Länder and Berlin on the development of eastern Germany, as well as the Federal Government’s comments on the reports. It was found that in 2011 the eastern Länder (excluding Berlin) had again used special-need supplementary federal grants (to cover special burdens resulting from the division of Germany and to compensate for disproportionately weak financial capacity) in a way that was almost fully compliant with Solidarity Pact II. The Federation had invested around €5 billion in the development of eastern Germany as part of Solidarity Pact II. This means the Federation has fulfilled around 70 per cent of its obligations arising from that Pact.

The resolutions and consultation documents of the Stability Council are published here (in German).

Press release

© Bundesfinanzministerium