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The State Treaty between the FRG and the GDR on the Creation of a Monetary, Economic, and Social Union (May 18, 1990)

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ARTICLE 23: Accident Insurance Pensions
(1) The German Democratic Republic shall introduce all necessary measures to adapt its accident insurance law to that of the Federal Republic of Germany. [ . . . ]

ARTICLE 24: Social Assistance
The German Democratic Republic shall introduce a system of social assistance which shall correspond to the Social Assistance Act of the Federal Republic of Germany.

ARTICLE 25: Initial Financing
If, during a transitional period, contributions to the unemployment insurance fund of the German Democratic Republic and both the contributions and the government subsidy to the pension insurance fund of the German Democratic Republic do not fully cover expenditure on benefits, the Federal Republic of Germany shall provide temporary initial financing for the German Democratic Republic within the framework of the budgetary aid granted under Article 28 of this Treaty.


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 enterprises,
– transport undertakings by making them legally independent,
– the management of 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 nationally-owned assets. Nationally-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.

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