Date 2022.10.19

The German government set out a defensive shield worth €200 billion to help support companies and private households with soaring energy prices. “The message conveyed is powerful. But the funding of this package through the Economic Stabilisation Fund is problematic for various reasons”, Kay Scheller, President of the Bundesrechnungshof, stated when presenting an advisory report to the parliamentary Budget Committee.

Our concerns in more detail:

• Funding the package via an off-budget federal entity exacerbates the already prevalent lack of budget transparency.
• The forward-looking borrowing regime actually violates the constitutional principle of annual budgeting: It includes new borrowings to meet expenses incurred only in 2023 and 2024.
• The proposed emergency resolution by the German parliament fails, at least in part, to meet the mandatory timing requirement laid down in Article 115 para. 2 of the German Constitution.

Instead of funding the package via a borrowing authority under the Economic Stabilisation Fund independently from the federal budget, it would have rather been appropriate to obtain funding directly through the federal budget. “Areas essential for government’s leeway to act and key public services need to be included in the core budget, which is subject to transparent and comprehensible parliamentary decision-making. This principle is enshrined in our Constitution. And it is also reflected in the rules of democracy”, Kay Scheller added.

The important message communicated to consumers and companies by the government’s intention to introduce this package most importantly requires a strategic budgetary implementation that is beyond any doubt.

Download the report here (german version)