Efficiency of the medium-term planning of federal expenditures in Germany: accuracy of budgetary projections

Abstract

The article examines the efficiency of medium-term financial planning in Germany from the point of view of the accuracy of budget projections for federal expenses. The author used the data on the formation and execution of three five-year plans (for 2002–2006, 2007–2011, 2012– 2016). In order to consolidate and standardize the items of the functional classification of expenses used in Germany’s federal financial plans, the author has transformed these items into the divisions of the functional classification of expenses established by the International Monetary Fund. This transformation allowed to estimate the accuracy of German financial planning according to the PEFA methodology. The comparison of financial plans with their execution was carried out in four profiles (total expenses by functional classification, total expenses by economic classification, current expenses by functional classification, capital expenses by functional classification). The results of calculations led to the conclusion that with the transition from the first of the abovementioned five-year plans to the second one and, further, to the third one, the deviations of the actual expenses from the planned ones reduced consistently: in total volumes, in both classifications (functional and economic), in both dimensions (absolute and relative). This indicates a deliberate increase in the accuracy of the budget expenditures’ planning in Germany on the base of new budget technologies

Keywords

• : five-year financial planning in germany
• federal budget’s expenses
• functional classification
• economic classification
• current expenses