In the present paper we try to shed some light on an issue that is closely connected to the issue of sustainable public finances. An interesting and still growing political economy literature has emphasised the importance of adequate fiscal or budgetary institutions for safeguarding sound public finances in the long run. Fiscal institutions in this context are understood as the entirety of formal and informal institutions that govern the decision-making process over public spending and revenues of a country. With this perspective in mind, we want to focus more closely on the “fiscalist” aspect of the problem of sustainability and pose the question of what the finance minister, in a more narrow view as being responsible for the budget, can contribute to a coherent political strategy to secure the long-run viability of public finances.
The present paper is devided into two main sections. Section 1 presents the past development of public debt in Germany as well as an outlook on the challenges that lay ahead due to the ageing of the population. In section 2 we discuss, from an applied perspective and quite selectively, existing fiscal institutions in Germany that are targeted at securing sound public finances and discuss approaches to improve these institutions.