Public Debt and Auditing of Public Finances : Germany

Apart from levying taxes to finance public expenditure, the government can also borrow money. Especially in the 1970s and since reunification, the federal and state finance ministers - despite drastic economy measures - have been drawing increasingly on the capital markets. In 1995 the country’s total public debt came to a record DM 1,976 billion, or almost DM24,204 per inhabitant. In 1996, federal new indebtedness totaled DM78.3 billion.

Auditing of federal and state administration of public finances in Germany has been assigned to the Federal Court of Audit and the 1 6 state courts of audit. This is in keeping with Germany’s federal structure and the constitutional principle that the Federation and the states shall be autonomous and mutually independent in their budget management.

As an independent body of government auditing, the Federal Court of Audit examines the accounts of the Federation and determines whether public finances have been properly and efficiently administered. It submits an annual report of its audit findings to the Federal Government as well as to the Bundestag and the Bundesrat. This report is also used by Parliament to approve the accounts for preceding years. The Federal Court of Audit has furthermore been given the task of making recommendations on the basis of its audit findings and of advising the bodies under audit and Parliament. Thus the Federal Court of Audit helps to enhance public sector management and performance.