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22 February 2018

Overview of federal budgetary and financial data up to and including January 2018

Translated extracts from the Federal Ministry of Finance’s February 2018 monthly report

Trends in the federal budget

Federal budget trends (figures in €m)
Actual 2017Actual1 as of January 2018
Expenditure (€bn)2

325.4

38.7

Year-on-year change in % (year to date)

-1.1

Revenue (€bn)2

330.4

22.5

Year-on-year change in % (year to date)

-11.5

Tax revenue (€bn)

309.4

20.7

Year-on-year change in % (year to date)

-12.2

Fiscal balance (€bn)

5.0

-16.1

Financing/use of surplus:

-5.0

16.1

Cash resources (€bn)

-

52.5

Seigniorage (€bn)

0.3

-0.1

reserve funds balance (€bn)

5.3

0.0

Net borrowing/current financial market balance3 (€bn)

0.0

-36.2


Until the 2018 budget adopted by the German
Bundestag is promulgated in the Federal Law Gazette, the federal government is working on the basis of an interim budget, which is based largely on Article 111 of the Basic Law (cf. the article “Vorläufige Haushaltsführung 2018” (“2018 Interim Budget Management”) in the German version of the January 2018 monthly report). Given that the targets for the 2018 federal budget have not been determined, no target values are included in the following tables.

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Revenue

Federal revenue in January 2018 totalled €22.5bn. This represents a decrease of 11.5% (-€2.9bn) over the same period of 2017, which is largely due to lower tax revenues in January 2018 compared with January 2017. This in turn is connected to a baseline effect with GNI-based own resources. In January 2017, refunds of GNI-based own resources from the EU that were made as a result of the EU’s balances exceeded the Federation’s payments of GNI-based own resources by around €3bn. This year, the net effect of the settlement process was lower, as was expected. Other revenue was slightly below the level in the same period last year (-1.7%).

Trends in federal revenue

Actual

2017

Actual

Year‑on‑year
change in %
(year to date)

January 2017Januar 2018

€m

Share
in %

€m

I. Tax revenue

309,376

93.6

23,625

20,743

 -12.2

Federal share of joint taxes:

252,630

76.5

16,543

17,246

+4.2

Revenue from personal and corporate income taxes (incl. final withholding tax on interest and capital gains)

136,685

41.4

7,036

7,697

+9.4

of which:

Wages tax

83,121

25.2

5,262

5,603

+6.5

Assessed income tax

25,256

7.6

414

416

+0.5

Non-assessed taxes on earnings

10,451

3.2

695

734

+5.6

Final withholding tax on interest and capital gains

3,227

1.0

505

557

+10.3

Corporation tax

14,629

4.4

159

386

+142.8

Value added taxes (VAT)

114,005

34.5

9,459

9,535

+0.8

Trade tax apportionment

1,941

0.6

48

14

 -70.8

Energy duty

41,022

12.4

277

279

+0.7

Tobacco duty

14,399

4.4

432

332

 -23.1

Solidarity surcharge

17,953

5.4

1,129

1,222

+8.2

Insurance tax

13,269

4.0

1,361

834

 -38.7

Electricity duty

6,944

2.1

526

586

+11.4

Motor vehicle tax

8,948

2.7

883

905

+2.5

Nuclear fuel tax

-7,262

-2.2

0

0

+0.0

Spirits duties

2,096

0.6

214

221

+3.3

Coffee duty

1,057

0.3

96

90

 -6.3

Aviation tax

1,121

0.3

40

35

 -12.5

Supplementary grants to Länder

-9,229

-2.8

0

0

+0.0

EU GNI own resources

-14,258

-4.3

2,991

-167

X

EU VAT own resources

-2,362

-0.7

-197

-181

 -8.1

Grants to Länder for public transport

-8,348

-2.5

-696

-708

+1.7

Grants to Länder for motor vehicle tax and HGV toll

-8,992

-2.7

0

0

+0.0

II. Other revenue

21,025

6.4

1,802

1,771

 -1.7

Revenue from economic activity

3,868

1.2

29

28

 -3.4

Interest revenue

344

0.1

15

31

+106.7

Loan repayments, holdings, privatisation revenue

1,786

0.5

27

37

+37.0

Total revenue1

330,401

100.0

25,427

22,514

 -11.5

1 Excluding revenue from internal offsetting.
Source: Federal Ministry of Finance

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Expenditure

Federal expenditure for January 2018 totalled €38.7bn, representing a total decrease of 1.1% ( €0.4bn) on the year.

Federal spending is separated into consumption and investment expenditure. Consumption expenditure was down by 1.7% on the year in January 2018. In particular, interest spending and human resources expenditure were lower compared with the same period last year. In contrast, ongoing grants for public administrations increased significantly on the year (+27.0%). This includes ongoing grants for the Länder, which were up by 31.7% (+€0.3bn) compared with January 2017. Subsidies to other areas were at a similar level to last year. However, divergent trends could also be observed: Subsidies to companies fell by 9.2% on the year, while there were increases in spending on pensions, social security and benefits (e.g. on basic income support for jobseekers and parental benefit, which were up by 0.4% and 6.8%, respectively). Investment expenditure in January 2018 was up sharply on the year (+5.6%). This was mainly the result of higher spending on investment grants, particularly due to higher levels of grants relating to a special fund for investment in the expansion of child-care facilities and higher subsidies to other areas compared with January 2017. Spending on fixed asset investment was significantly lower in year-on-year terms.

Trends in federal expenditure by function

Actual

2017

Actual

Year‑on‑year

change in %
(year to date)

January 2017

January 2018

m

Share

in %

€m

General public services

77,006

 23.7

7,147

6,981

 -2.3

Economic cooperation and development

8,330

 2.6

1,181

957

 -18.9

Defence

36,419

 11.2

3,279

3,384

+3.2

Government, central administration

15,858

 4.9

1,591

1,627

+2.3

Revenue administration

4,554

 1.4

348

333

 -4.1

Education, science, research, cultural affairs

22,984

 7.1

1,526

1,232

 -19.3

Support for school and university students and training programme participants

3,603

 1.1

527

390

 -26.1

Science, research and development outside of higher education institutions

12,268

 3.8

530

509

 -3.9

Social security, family and youth affairs, labour market policy

168,801

 51.9

20,270

21,130

+4.2

Social insurance including unemployment insurance

111,703

 34.3

15,905

16,224

+2.0

Labour market policy

37,590

 11.6

2,961

3,075

+3.9

of which: Unemployment benefit II under Book II of the Social Code

21,423

 6.6

2,006

2,014

+0.4

Unemployment Benefit II, government housing and heating allowances under Book II of the Social Code

6,753

 2.1

419

514

+22.6

Family assistance, welfare services, etc.

8,296

 2.5

756

823

+8.9

Social benefits for the consequences of war and political events

1,930

 0.6

215

153

 -28.8

Health, environment, sport, recreation

2,303

 0.7

178

119

 -33.2

Housing, regional planning and local community services

2,923

 0.9

345

311

 -9.9

Housing, home ownership savings premium

2,267

 0.7

343

308

 -10.0

Food, agriculture and forestry

1,068

 0.3

20

16

 -21.5

Energy and water supply, trade and services

4,195

 1.3

1,173

1,120

 -4.6

Regional support measures

726

 0.2

2

1

 -22.9

Mining, manufacturing and construction

1,532

 0.5

1,011

1,008

 -0.3

Transport and communication

21,228

 6.5

1,387

1,271

 -8.4

Roads

9,484

 2.9

615

628

+2.2

Railways and public transport

7,047

 2.2

287

305

+6.0

Financial management

30,532

 9.4

7,073

6,500

 -8.1

Interest expenditure

17,500

 5.4

6,727

6,190

 -8.0

Total expenditure1

325,380

 100.0

39,100

38,651

 -1.1

1 Excluding expenditure from internal offsetting.
Source: Federal Ministry of Finance

Trends in federal expenditure by economic category

Actual

2017

Actual

Year‑on‑year

change in %
(year to date)

January 2017January 2018

€m

Share
in %

€m

Consumption expenditure

291,367

89.5

35,986

35,364

 -1.7

Personnel expenditure

31,824

9.8

3,404

3,197

 -6.1

Salary payments

23,182

7.1

2,367

2,155

 -9.0

Pensions

8,643

2.7

1,037

1,042

+0.5

Current material expenditure

28,693

8.8

1,673

1,661

 -0.7

Non-personnel expenditure

1,571

0.5

85

81

 -4.7

Military procurement

10,625

3.3

512

618

+20.7

Other

16,498

5.1

1,076

962

 -10.6

Interest expenditure

17,497

5.4

6,727

6,190

 -8.0

Current grants and subsidies

212,582

65.3

24,078

24,263

+0.8

to public administration

24,814

7.6

1,061

1,347

+27.0

to other sectors

187,768

57.7

23,018

22,916

 -0.4

including:

Private enterprises

28,527

8.8

2,930

2,660

 -9.2

Pensions, assistance etc.

30,127

9.3

2,896

2,940

+1.5

Social insurance funds

117,495

36.1

16,213

16,557

+2.1

Other asset transfers

770

0.2

104

54

 -48.1

Investment expenditure

34,013

10.5

3,114

3,287

+5.6

Financial assistance

24,170

7.4

2,749

2,939

+6.9

Grants and subsidies

21,421

6.6

2,566

2,798

+9.0

Loans, guarantees

1,221

0.4

70

28

 -60.0

Acquisition of holdings; capital contributions

1,528

0.5

113

113

+0.0

Fixed asset investment

9,843

3.0

365

348

 -4.7

Construction measures

7,631

2.3

234

246

+5.1

Acquisition of movable assets

1,713

0.5

106

85

 -19.8

Acquisition of real property

499

0.2

26

17

 -34.6

General reduction/increase in expenditure

0

0.0

0

0

X

Total expenditure1

325,380

100.0

39,100

38,651

 -1.1

1 Excluding expenditure from internal offsetting.
Source: Federal Ministry of Finance

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Fiscal balance

The federal budget recorded a deficit of €16.1bn for January 2018.

Revenue and expenditure are subject to strong fluctuations over the course of the fiscal year and thus have an uneven effect on cash funds in individual months. Net borrowing also tends to fluctuate considerably over the course of the year. This means that the fiscal balance at this point in the year and the corresponding net borrowing figures are not reliable indicators of the end-of-year figures for the fiscal balance and net borrowing. This is especially true at the start of the year, particularly when an interim budget is being used.

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General government tax revenue

Total tax revenue (provisional, in €m)

Period

Total tax revenue

Projection for 20181

703,046

January

47,874

January to January

47,874

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Trends in general government tax revenue

Current-year trends in tax revenue (excluding local authority taxes)

2018

January

Year‑on‑year
change

January to

January

Year‑on‑year
change

2018 estimates4

Year‑on‑year
change

in €m

in %

in €m

in %

in €m

in %

Joint taxes

 

 

 

 

 

 

Wages tax2

17,305

+5.3

17,305

+5.3

205,200

+4.9

Assessed income tax

985

+0.7

985

+0.7

60,950

+2.6

Non-assessed taxes on earnings

1,534

+3.6

1,534

+3.6

19,880

 -5.0

Final withholding tax on interest and capital gains

1,267

+10.4

1,267

+10.4

7,500

+2.3

Corporation tax

773

+142.7

773

+142.7

30,650

+4.8

Value added taxes (VAT)

19,073

+1.6

19,073

+1.6

234,450

+3.6

Trade tax apportionment

18

 -70.5

18

 -70.5

4,718

+0.7

Increased trade tax apportionment

66

 -53.9

66

 -53.9

3,868

 -0.7

Total joint taxes

41,021

+4.3

41,021

+4.3

567,216

+3.6

Federal taxes

Energy duty

279

+0.7

279

+0.7

41,000

 -0.1

Tobacco duty

332

 -23.0

332

 -23.0

14,360

 -0.3

Spirits duty incl. alcopops duty

221

+3.4

221

+3.4

2,080

 -0.6

Insurance tax

834

 -38.8

834

 -38.8

13,520

+1.9

Electricity duty

586

+11.3

586

+11.3

6,930

 -0.2

Motor vehicle tax

905

+2.5

905

+2.5

9,010

+0.7

Aviation tax

35

 -11.0

35

 -11.0

1,175

+4.9

Nuclear fuel duty

0

X

0

X

0

X

Solidarity surcharge

1,222

+8.2

1,222

+8.2

18,450

+2.8

Other federal taxes

139

+12.9

139

+12.9

1,463

+1.2

Total federal taxes

4,552

 -8.7

4,552

 -8.7

107,988

+8.1

Länder taxes

Inheritance tax

486

 -6.7

486

 -6.7

5,767

 -5.7

Real property transfer tax

1,223

+10.6

1,223

+10.6

13,820

+5.2

Betting and lottery tax

174

 -9.0

174

 -9.0

1,881

+2.4

Beer duty

54

 -0.9

54

 -0.9

659

 -0.8

Other Länder taxes

22

+8.9

22

+8.9

465

+3.1

Total Länder taxes

1,959

+3.5

1,959

+3.5

22,592

+1.7

EU own resources

Customs duty

343

 -5.3

343

 -5.3

5,250

+3.7

VAT-based own resources

181

 -8.2

181

 -8.2

2,510

+6.3

GNI-based own resources

167

X

167

X

24,440

+71.4

Total EU own resources

691

X

691

X

32,200

+48.5

Federation3

21,149

 -11.7

21,149

 -11.7

315,797

+2.1

Länder 4

22,523

+3.3

22,523

+3.3

306,787

+2.8

EU

691

X

691

X

32,200

+48.5

Local authorities’ share of income tax and value added tax

3,511

+7.9

3,511

+7.9

48,262

+6.9

Total tax revenue (excluding local authority taxes)

47,874

+2.8

47,874

+2.8

703,046

+4.2

1 Methodology: Total cash income from the various taxes is recorded and allocated to the various government levels as stipulated by law. Actual tax amounts collected in the current month by individual government levels may differ from target amounts due to technical reasons.
2 After deduction of child benefit refunds by the Federal Central Tax Office.
3 After supplementary grants; any discrepancies with table on federal revenue are due to methodology used.
4 Working Party on Tax Revenue Estimates, November 2017
Source: Federal Ministry of Finance

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Tax revenue in January 2018

Total tax revenue (excluding local authority taxes) posted moderate year-on-year growth in January 2018, rising by 2.8%. Revenue from joint taxes rose sharply, by 4.3% on the year; this was driven by increases in revenue from wages tax and corporation tax. Revenue from final withholding tax on interest and capital gains was also up significantly. Receipts from insurance tax and tobacco duty were down by 38.8% and 23.0%, respectively, leading to a 8.7% drop in overall revenue from federal taxes. In terms of taxes that accrue solely to the Länder, revenue was up by 3.5% on the year in January.

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EU own resources

Following the EU settlement process, approximately €1.7bn in VAT and GNI-based own resources were refunded to the Federation in January 2018. In turn, the Federation transferred GNI-based own resources totalling around €1.9bn and VAT own resources of €0.2bn to the EU. Taking into account the customs duties that were also transferred, the overall balance for EU own resources was approximately €0.7bn in January 2018.

In January 2017, approximately €4.7bn in GNI-based own resources were refunded to the Federation following the EU settlement process for payments from previous years, while the Federation transferred around €1.7bn in GNI-based own resources to the EU as part of its payments for 2017. Taking VAT own resources and customs duties into consideration, the result at the time was a balance of -€2.4bn, due to the fact that the repayment to the Federation exceeded the transfers to the EU.

Given the fact that the transfers of VAT and GNI-based own resources to the EU are included as estimates in the federal budget, then the difference of €3bn between the EU settlements in January 2017 and January 2018 has the effect of reducing the Federation’s revenue in arithmetic terms.

Transfers to the EU are based on the planned financial framework for 2018. Fluctuations occur over the course of the year based on the EU’s financing needs at any given time.

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Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for federal supplementary grants to the Länder, based on provisional figures) fell by 11.7% on the year in January 2018 in arithmetic terms, compared with an inflated baseline figure for January 2017 (see EU own resources above). Länder tax receipts increased by 3.3% on the year in January 2018 after accounting for supplementary federal grants (provisional figures). The local authorities’ share of revenue from joint taxes was up by 7.9% on the year.

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Joint taxes

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Wages tax

Revenue from wages tax again recorded strong growth in January 2018, with gross revenue from this tax increasing by 4.7% on the year. The labour market situation remains favourable, which, together with rising incomes, means that a positive trend in revenue from this tax is expected in the coming months. Child benefit payments – which are financed from receipts from wages tax – rose by 1.9% on the year in January 2018. On balance, cash receipts from wages tax were up by 5.3% in year-on-year terms in January 2018.

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Corporation tax

Revenue fluctuations related to assessment activities and audits led to a somewhat low level of revenue from corporation tax in January 2017. This puts into perspective the fact that gross revenue from corporation tax increased by 142.1% in year-on-year terms in January 2018, especially as this was a low-yield month for this tax. After deducting investment allowance payments, which are continuing to decline in terms of volume, cash receipts from corporation tax stood at €0.8bn for January 2018.

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Assessed income tax

Gross revenue from assessed income tax was up by 4.5% over January 2017. On balance, cash receipts from assessed income tax were practically unchanged at approximately €1.0bn in January 2018 (up by 0.7% compared with January 2017), after subtracting employee refunds (which increased by 9.6%), investment allowance payments and owner-occupied homes premiums.

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Non-assessed taxes on earnings

January 2018 saw a year-on-year drop of 3.3% in gross receipts from non-assessed taxes on earnings, compared with a high baseline in the previous year. Nevertheless, after deducting refunds by the Federal Central Tax Office, which are financed from this revenue, and which were down by 48.4%, cash receipts from non-assessed taxes on earnings grew by 3.6% in January 2018.

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Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains rose by 10.4% on the year in January 2018. It is not possible to provide reliable information regarding what share of the revenue came from interest and what share from capital gains, because no separate statistics are kept on the two revenue components.

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Value added taxes

Revenue from value added taxes posted moderate year-on-year growth of 1.6% in January 2018, compared with a high baseline figure in January 2017. In January 2018, receipts from domestic VAT grew by 1.8% in year-on-year terms, while the yield from import VAT rose by 0.8%.

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Taxes accruing to the Federation

Receipts from taxes accruing solely to the Federation were down by 8.7% (-€0.4bn) on the year in January 2018. Revenue growth for the solidarity surcharge (+8.2%), electricity duty (+11.3%), alcohol duty, which was formerly known as spirits duty (+3.4%), and sparkling wine duty (+84.6%) could not make up for lower receipts from insurance tax, which were down by €0.5bn (-38.8%), and tobacco duty, which fell by €0.1bn (-23.0%). With regard to insurance tax, part of the expected revenue was shifted to the following month for technical reasons, with the result that it will only be booked in February.

The downward trend in revenue from tobacco duty is partly related to a relatively high baseline figure in January 2017. In addition, there is a significant level of uncertainty regarding the evaluation of the monthly results due to the increasing popularity of alternative tobacco products (e.g. e-cigarettes and “heat-not-burn” products). Receipts from aviation tax and coffee duty also fell in year-on-year terms in January 2018, by 11.0% and 5.8%, respectively. Trends in revenue from other taxes had only a minor impact on the overall results for federal taxes.

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Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up by 3.5% on the year in January 2018. Higher revenue from real property transfer tax (+10.6%) more than made up for lower yields from inheritance tax (-6.7%) and betting and lottery tax (-9.0%). Beer duty revenue was relatively unchanged in year-on-year terms ( 0.9%).

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Credit market funds

Debt level:
31 December 2017

Borrowing
(increase)
Januar 2018

Debt repayment

(decrease)

January 2018

Debt level:
31 January 2018

Change in debt level (balance)

January 2018

(in €m)

Budget borrowing

1,086,311

20,488

-22,248

1,084,551

-1,760

broken down by purpose

Federal budget

1,044,972

20,492

-22,248

1,043,216

-1,756

Financial Market Stabilisation Fund

22,418

-3

-

22,415

-3

Investment and Redemption Fund

18,920

0

-

18,920

0

broken down by dept type

Federal securities

1,072,745

20,488

-22,043

1,071,190

-1,555

Federal bonds

693,282

14,535

-20,000

687,817

-5,465

30-year federal government bonds

203,462

1,497

-

204,959

1,497

10-year federal government bonds

489,820

13,038

-20,000

482,858

-6,962

Inflation-linked federal securities

72,855

466

-

73,321

466

30-year,inflation-linked,federal,government,bonds

6,275

401

-

6,676

401

10-year inflation-linked federal government bonds

52,090

100

-

52,190

100

Inflation-linked federal government debentures

14,490

-35

-

14,455

-35

Federal notes

203,899

127

-

204,026

127

Federal Treasury notes

91,013

5,360

-

96,373

5,360

Treasury discount papers issued by the Federation

10,037

-

-2,007

8,030

-2,007

Other federal securities

1,660

0

-36

1,623

-36

Securitised loans

9,091

-

-205

8,886

-205

Other loans and ordinary debts

4,475

-

-

4,475

-

broken down by maturity

Short term (up to one year)

159,757

 

 

165,302

5,545

Medium term (one to four years)

332,271

 

 

338,399

6,128

Long term (over four years)

594,282

 

 

580,850

-13,433

for information purposes only

Liabilities resulting from inflation adjustments of inflation-linked securities4,7204,781617
Reserve for inflation adjustments of the principal of the inflation-linked securities according to Schlussfinanzierungsgesetz3,6223,63210

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Guarantees

Guarantees (in €bn)

Purpose of guarantees

Authorised ammount

Amount allocated
as of
31 December 2017

Amount allocated

as of
31 December 2016

Export credit guarantees

160.0121.0128.6

Loans to foreign debtors, direct foreign investment, EIB loans, KfW shareholding in EIF

65.044.344.7

Financial cooperation projects

28.519.617.6

Food stockpiling

0.70.00.0

Domestic guarantees

158.0103.1102.6

International financial institutions

66.060.160.1

Treuhandanstalt successor organisations

1.01.01.0

Interest compensation guarantees

15.015.010.0

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Key dates on the fiscal policy agenda

Event

Date

Eurogroup and ECOFIN Council meetings in Brussels

                                                     12-13 March 2018

Meeting of G20 finance ministers and central bank governors in Buenos Aires, Argentina

                                                     19-20 March 2018

European Council in Brussels

                                                     22-23 March 2018

Spring Meetings of the IMF and World Bank in Washington, D.C.

                                                  19 to 21 April 2018

Meeting of G20 finance ministers and central bank governors in Washington, D.C.

                                                             20 April 2018

Meeting of ASEM finance ministers in Sofia, Bulgaria

                                                            26. April 2018

Eurogroup and informal ECOFIN Council meetings in Sofia, Bulgaria

                                                      27-28 April 2018

Tax revenue estimate meeting in Mainz

                                                         7 to 9 May 2018

Eurogroup and ECOFIN Council meetings in Brussels

                                                        24-25 May 2018

Exact statistics and explanations for 1 to 5 above can be found in the German version of the Federal Ministry of Finance’s monthly report.