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Sta­bil­i­ty Coun­cil Act (Sta­bil­ität­srats­ge­setz)

Act on the Establishment of a Stability Council and on the Avoidance of Budgetary Emergencies (Stability Council Act)1

Date of signature: 10 August 2009

Full citation:

Stability Council Act of 10 August 2009 (Federal Law Gazette I, p. 2702), as amended by Article 2 of the Act of 15 July 2013 (Federal Law Gazette I, p. 2398)

  • 09 August 2016

Section 1 – Stability Council

(1) With the aim of avoiding budgetary emergencies, the Federation and the Länder shall form a Stability Council. The Stability Council shall consist of:

  1. the Federal Minister of Finance,
  2. the Länder ministers responsible for finance,
  3. the Federal Minister of Economics and Technology.

The Stability Council shall be set up attached to the Federal Government.

(2) The Federal Minister of Finance and the chair of the Länder Finance Minister Conference shall co-chair the Stability Council.

(3) The Stability Council shall meet as required but at least twice a year. The meetings shall be confidential and not public.

(4) The resolutions of the Stability Council must obtain the vote of the Federation and a majority of two-thirds of the Länder. The vote of the Federation shall be cast by the Federal Minister of Finance. In the case of decisions affecting individual Länder, the affected Land shall not be entitled to vote. Notwithstanding the first sentence above, decisions affecting the Federation shall be taken by a majority of two thirds of all voting members. The resolutions and the consultation documents on which they are based shall be published.

(5) The Stability Council shall adopt its own rules of procedure. These shall also regulate representation in the event of inability to attend.

(6) To support the tasks of the Stability Council, a secretariat shall be set up comprising one representative from the Federal Ministry of Finance and one representative appointed by the Länder Finance Minister Conference respectively.

Section 2 – Stability Council’s tasks

The Stability Council’s tasks shall be to monitor the Federation and Länder budgets on a regular basis and to carry out the budget rehabilitation procedure under section 5. The Stability Council shall monitor compliance with the upper limit for the general government structural deficit under section 51 subsection (2) of the Budgetary Principles Act2. Further tasks may be delegated to the Stability Council by law.

Section 3 – Regular budgetary surveillance

(1) The Stability Council shall monitor the current state and development of the budgets of the Federation and Länder on a regular basis.

(2) The Stability Council shall consult annually on the budgetary situation of the Federation and each individual Land. The basis for these consultations shall be a report from the political subdivision in question, which is to contain certain indicators for the current budgetary situation and financial planning, the compliance with the constitutional limits on borrowing, as well as a forecast of the medium-term budgetary development based on standardised assumptions. The Stability Council shall stipulate suitable generally applicable indicators.

(3) The budgetary indicators presented and the conclusions of the Stability Council shall be published.

Section 4 – Threat of a budgetary emergency

(1) The Stability Council shall adopt generally applicable threshold values for the individual indicators under section 3 subsection (2), the exceeding of which may indicate the threat of a budgetary emergency. Threshold values diverging from those for Länder shall be set for the Federation.

(2) The Stability Council shall initiate a review to establish whether the Federation or a particular

is threatened with a budgetary emergency where:

  1. in the framework of general budgetary surveillance, the Federation or a Land indicates that the budget for which it is responsible is threatened with an emergency, or
  2. the Federation or a Land exceeds the threshold values under subsection (1) above in the case of the majority of the indicators under section 3 subsection (2) or the forecast predicts a
    corresponding trend.

(3) The review shall take full account of all relevant areas of the affected budget. The Federation or the Land shall be obliged to provide the information required for this review.

(4) The results of the review shall be presented in a report to the next meeting of the Stability Council. The report shall adopt a position on whether the Federation or the relevant Land is threatened with a budgetary emergency and provide a corresponding recommendation for a resolution.

(5) On the basis of the review report under subsection (4) above, the Stability Council shall determine whether the Federation or the relevant Land is threatened with a budgetary emergency.

Section 5 – Budget rehabilitation procedure

(1) Where the Stability Council finds that the Federation or a Land is threatened with a budgetary emergency under section 4 subsection (5), it shall agree a budget rehabilitation programme with the Federation or Land. The Federation or the Land shall provide proposals for this. The budget rehabilitation programme shall extend over five years as a rule; it shall contain specifications regarding the envisaged reduction increments for annual net borrowing as well as suitable budget rehabilitation measures. Budget rehabilitation measures shall only be considered suitable if they fall under the sole jurisdiction of the affected political subdivision.

(2) The Federation or the Land shall implement the agreed budget rehabilitation programme on its own responsibility and report to the Stability Council every six months on the compliance with the agreed reduction increments for annual net borrowing. Where the actual net borrowing diverges from the agreed net borrowing, the Stability Council shall review in agreement with the Federation or the Land whether and which additional measures are necessary.

(3) Where the Federation or the Land presents unsuitable or insufficient proposals for budget rehabilitation measures or where the Federation or Land does not implement the agreed measures sufficiently, the Stability Council shall adopt a call for enhanced rehabilitation of the budget. No later than one year after this call has been made, the Stability Council shall review whether the Federation or the Land has taken the necessary measures to rehabilitate the budget. If the necessary measures have not been taken, the Stability Council shall again call on the Federation or the Land to enhance efforts to rehabilitate the budget.

(4) Upon conclusion of the budget rehabilitation programme, the Stability Council shall review the budgetary situation of the Federation or the Land. In the event that there continues to be a threat of a budgetary emergency despite the implementation of the agreed budget rehabilitation programme in full, a new budget rehabilitation programme shall be agreed between the Stability Council and the Federation or the Land.

Section 6 – Compliance with the upper limit for the general government structural deficit under section 51 subsection (2) of the Budgetary Principles Act

(1) The Stability Council shall, on the basis of an estimate of the general government balance, twice annually review compliance with the upper limit for the general government structural deficit under section 51 subsection (2) of the Budgetary Principles Act for the current year and the four subsequent years.

(2) If, following the review, the Stability Council concludes that the upper limit for the general government structural deficit will be exceeded, it shall recommend suitable measures for eliminating the excessive deficit. The Council’s recommendations under Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (OJ L 209, 2.8.1997, p. 1), as last amended by Council Regulation No 1175/2011 (OJ L 306, 23.11.2011, p. 12), shall be taken into account in this regard. The Stability Council’s recommendations shall be submitted to the Federal Government and the Länder governments to be forwarded to their respective parliaments.

(3) If no resolution is made by the Stability Council to issue a recommendation under subsection (2), the chairs of the Stability Council shall submit a report outlining the results of the review and the measures discussed by the Stability Council to the Federal Government and the Länder governments to be forwarded to their respective parliaments. The assessments and recommendations of the independent advisory board to the Stability Council under section 7 subsection (3) shall be attached to this report.

Section 7 – Independent advisory board to the Stability Council

(1) An independent advisory board shall be established to assist the Stability Council in monitoring compliance with the upper limit for the general government structural deficit under section 51 subsection (2) of the Budgetary Principles Act. The advisory board shall adopt its own rules of procedure by a two-thirds majority of its members. The Federation and the Länder shall each pay half of the costs of the advisory board.

(2) The advisory board’s members shall include one representative each from the Deutsche Bundesbank and the German Council of Economic Experts, one representative from the research institutes involved in preparing the Joint Economic Forecast, four experts appointed by the Federation and Länder, who shall each appoint two experts for a period of five years via their representatives on the Stability Council, and two experts appointed by the national associations of local authorities and the national organisations of the social security funds, who shall each appoint one expert for a period of five years.

(3) The advisory board shall issue a statement on compliance with the upper limit for the general government structural deficit under section 51 subsection (2) of the Budgetary Principles Act. If it reaches the conclusion that the upper limit has not been complied with, it shall recommend suitable measures for eliminating the excessive deficit. The chair of the advisory board shall attend the Stability Council’s consultations in this respect.

(4) The advisory board’s assessments and recommendations shall be published.

Footnotes

1 This working translation of the Gesetz zur Errichtung eines Stabilitätsrates und zur Vermeidung von Haushaltsnotlagen (Stabilitätsratsgesetz – StabiRatG) is provided by the Language Service of the Federal Ministry of Finance. Only the German text of this Act is authentic.

2 Gesetz über die Grundsätze des Haushaltsrechts des Bundes und der Länder (Haushaltsgrundsätzegesetz − HGrG)

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