Working Paper
Public Transfers bound for funding German unification: a stock-taking (original publication in German)
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Tax Policy
Fiscal Policy & National Budgets
Germany
After the German unification, a large number of measures were taken to improve or build up the infrastructure in the new federal states, to promote investment activity and to cushion the adjustment process socio-politically. The transfers from West to East Germany are made in an intransparent system through numerous public institutions. These include the federal government, many special funds, the West German states and municipalities as well as social insurance. In the period 1991-1995, transfers of DM 886 billion were made to the new Länder and East Berlin. After extremely high performance in 1992 (DM 253 billion), West German transfers to eastern Germany declined significantly. At the peak, the transfers made through the Treuhandanstalt and the transfers that took place when the loan resolution fund took over debts from the "currency conversion" compensation fund played a major role, with total transfers amounting to DM 141 billion in 1995.
