Countries of the World/COUNTRYS.BIN/dp/0141/01412.txt

Text File | 1991-06-25 | 14KB | 298 lines

$Unique_ID{COW01412}
$Pretitle{373B}
$Title{Unified Germany
Chapter 5.    Provisions Concerning the Budget and Finance}
$Subtitle{}
$Author{Press and Information Office}
$Affiliation{German Embassy, Washington DC}
$Subject{republic
contracting
tax
german
democratic
federal
party
parties
article
budget}
$Date{1990}
$Log{}
Country:     Unified Germany
Book:        The Unity of Germany and Peace in Europe
Author:      Press and Information Office
Affiliation: German Embassy, Washington DC
Date:        1990

Chapter 5.    Provisions Concerning the Budget and Finance

SECTION 1

The Budget

ARTICLE 26__________

Principles underlying the Fiscal Policy of the German Democratic Republic

     (1) Public budgets in the German Democratic Republic shall be drawn up by
the relevant national, regional or local authorities on their own
responsibility, due account being taken of the requirements of general
economic equilibrium. The aim shall be to establish a system of budgeting
adapted to the market economy. Budgets shall be balanced as regards revenue
and expenditure. All revenue and expenditure shall be included in the
appropriate budget.

     (2) Budgets shall be adapted to the budget structures of the Federal
Republic of Germany. The following in particular shall be removed from the
budget, starting with the partial budget for 1990 as of the establishment of
monetary union:

     -the social sector, in so far as it is wholly or mainly financed from
charges or contributions in the Federal Republic of Germany,

     - state undertakings by conversion into legally and economically
independent enterprise,

     - transport undertakings by making them legally independent,

     - the Deutsche Reichsbahn and the Deutsche Post, which will be operated
as special funds.

     Government borrowing for housing shall be allocated to individual
projects on the basis of their existing physical assets.

     (3) National, regional and local authorities in the German Democratic
Republic shall make every effort to limit deficits in drawing up and
executing budgets. As regards expenditure this shall include:

     - abolition of budget subsidies, particularly in the short term for
industrial goods, agricultural products and food, autonomous price supports
being permissible for the latter in line with the regulations of the European
Communities, and progressively in the sectors of transport, energy for private
households and housing, making allowance for the general development of
income,

     - sustained reduction of personnel expenditure in the public service,

     - review of all items of expenditure, including the legal provisions on
which they are based, to determine whether they are necessary and can be
financed,

     - structural improvements in the education system and preparatory
division according to a federal structure (including the research sector).

     As regards revenue, the limitation of deficits shall require, in addition
to the measures under Section 2 of this Chapter, the harmonization or
introduction of contributions and fees for public services corresponding to
the system in the Federal Republic of Germany.

     (4) An inventory shall be made of publicly owned assets. Publicly owned
assets shall be used primarily for the structural adaptation of the economy
and for the recapitalization of the budget in the German Democratic Republic.

ARTICLE 27__________

Borrowing and Debts

     (1) Borrowing authorizations in the budgets of the local, regional and
national authorities of the German Democratic Republic shall be limited to
10 billion Deutsche Mark for 1990 and 14 billion Deutsche Mark for 1991 and
allocated to the different levels of government in agreement with the Minister
of Finance of the Federal Republic of Germany. A borrowing limit of 7 billion
Deutsche Mark for 1990 and 10 billion Deutsche Mark for 1991 shall be
established for the advance financing of proceeds expected to accrue from the
realization of assets currently held in trust. In the event of a fundamental
change in conditions, the Minister of Finance of the Federal Republic of
Germany may permit these credit ceilings to be exceeded.

     (2) The raising of loans and the granting of equalization claims shall be
conducted in agreement between the Minister of Finance of the German
Democratic Republic and the Minister of Finance of the Federal Republic of
Germany. The same shall apply to the assumption of sureties, warranties or
other guarantees and for the total authorizations for future commitments to be
appropriated in the budget.

     (3) After accession, debt accrued in the budget of the German Democratic
Republic shall be transferred to the assets held in trust in so far as it can
be redeemed by proceeds expected to accrue from the realization of the assets
held in trust. The remaining debt shall be assumed in equal parts by the
Federal Government and the Lander newly constituted on the territory of the
German Democratic Republic. Loans raised by Lander and local authorities
shall remain their responsibility.

ARTICLE 28__________

Financial Allocations granted by the Federal Republic of Germany

     (1) The Federal Republic of Germany shall grant the German Democratic
Republic financial allocations amounting to 22 billion Deutsche Mark for the
second half of 1990 and 35 billion Deutsche Mark for 1990 for the specific
purpose of balancing its budget. Furthermore, initial financing shall be made
available from the federal budget, in accordance with Article 25, amounting
to 750 million Deutsche Mark for the second half of 1990 for pension insurance
as well as 2 billion Deutsche Mark for the second half of 1990 3 billion
Deutsche Mark for 1991 for unemployment insurance. Payments shall be made as
required.

     (2) The Contracting Parties agree that the transit sum payable under
Article 18 of the Agreement of 17 December 1971 on the Transit of Civilian
Persons and Goods between the Federal Republic of Germany and Berlin (West)
shall lapse upon the entry into force of this Treaty. The German Democratic
Republic shall cancel with effect for the two Contracting Parties the
regulations on fees laid down in that Agreement and in the Agreement of 31
October 1979 on the Exemption of Road Vehicles from Taxes and Fees. In
amendment of the Agreement of 5 December 1989, the Contracting Parties agree
that from 1 July 1990 no more payments shall be made into the hard-currency
fund (for citizens of the German Democratic Republic travelling to the Federal
Republic of Germany). A supplementary agreement shall be concluded between the
Finance Ministers of the Contracting Parties on the use of any amounts
remaining in the fund upon the establishment of monetary union.

ARTICLE 29__________

Transitional Regulations in the Public Service

     The Government of the German Democratic Republic shall guarantee, with
due regard for the first sentence of Article 2 (1), that in collective
bargaining agreements or other settlements in the public administration sector
the general economic and financial conditions in the German Democratic
Republic and the exigencies of budget consolidation are taken into account,
with any new service regulations being of a transitional nature only. The
Federal Representation of Staff Act shall be applied mutatis mutandis.

SECTION 2

Finance

ARTICLE 30__________

Customs and Special Excise Taxes

     (1) In accordance with the principle set out in Article 11 (3) of this
Treaty, the German Democratic Republic shall adopt step by step the customs
law of the European Communities, including the Common Customs Tariff, and the
special excise taxes stipulated in Annex IV to this Treaty.

     (2) The Contracting Parties are agreed that their customs territory shall
comprise the area of application of this Treaty.

     (3) Equalization at the border between the fiscal territories for excise
taxes of both Contracting Parties, except those on tobacco, shall be
discontinued. Fiscal jurisdict