The state as a financial actor is commonly imagined to be a unitary entity that interacts with the wider financial system via its core budget operated by the treasury that generates inflows via taxes and outflows through government spending. However, an emerging literature places increasing emphasis on off-balance-sheet fiscal agencies (OBFAs)—financial entities that are separate from the treasury but carry out activities on behalf of the state which could also run via the core budget while often receiving explicit or implicit fiscal backstops. This gives rise to a “fiscal ecosystem” of national and sub-national treasuries and OBFAs that is different in each country, historically specific, and inherently opaque. Fiscal ecosystems are subject to constant transformation that is driven by political, economic, and legal concerns, with ample path dependencies. In this article, we use Germany as a case study to develop a methodology that combines scholarship in law and political economy to categorise and empirically map its contemporary fiscal ecosystem. Throughout its turbulent history, Germany has developed a highly complex web of OBFAs across various layers of its federal system. Their number ranges in the tens of thousands. We place them in a coordinate system and depict their proximity or distance to the core budget by drawing on their legal status, revenue model, and characteristics of their issued debt (if there is any). Moreover, we carve out the conditions under which OBFAs are subject to Germany’s constitutional debt brake and the EU fiscal rules. If and how OBFAs are affected by debt brakes has been notoriously opaque but is a matter of great political salience since Germany’s constitutional court has objected in November 2023 to the financial treatment of special funds (Sondervermögen), which created a budgetary crisis and a spending freeze.
Co-authors:
Gregor Laudage, Global Climate Forum, Berlin
Armin Haas, Global Climate Forum, Berlin
Andrei Guter-Sandu, University of Bath
Published version:
Journal of Law and Political Economy, 2026
Working paper versions:
OBFA-TRANSFORM Working Paper No. 1-EN (English)
OBFA-TRANSFORM Working Paper Nr. 1-DE (German: ‘Staatsfinanzen jenseits des Kernhaushalts’)
Related work
- The Mefo Operation. A Macro-Financial Analysis of Hjalmar Schacht’s Shadow Money Scheme
- The Eurozone’s Evolving Fiscal Ecosystem (New Political Economy, 2022)
- The Transformation of South Africa’s Monetary Architecture, 1983–2024
- Research theme: Financing Large-Scale Transformations
- All publications: Publications
