Landeskreditbank Baden-Württemberg - L-Bank

The Euro-zone follows a mutual monetary policy formulated by the European Central Bank, or ECB. The
ECB is a politically independent institution whose main goal is to pursue price stability free of political
influence.
The following table sets forth, for the periods indicated, average exchange rates between the Euro and the
U.S. dollar, the Swiss Franc and the Japanese Yen:
Currency
Average Exchange Rate
4 th quarter
2004
3 rd quarter
2004
2 nd quarter
2004
1 st quarter
2004 2003 2002 2001
U.S. Dollar ..................... 1.2977 1.2220 1.2046 1.2497 1.1312 0.9456 0.8956
Swiss Franc ..................... 1.5335 1.5363 1.5374 1.5686 1.5212 1.4670 1.5105
Japanese Yen .................... 137.11 134.38 132.20 133.97 130.97 118.06 108.68
Source: European Central Bank, Monthly Bulletin, November 2004, Table 8.2, page S 68 and March 2005,
Table 8.2, page S 67.
PUBLIC FINANCE
State Budget
The state government of Baden-Württemberg has its own budget independent from the budget of the federal
government of Germany. The state budget is drafted for one year or two consecutive years (the current budget is
drafted for the years 2005 and 2006) and adopted by the Baden-Württemberg parliament (Landtag). The fiscal
year for the state budget is the calendar year. In addition, the Minister of Finance presents in parliament a
medium-term financial plan based on planning figures collected from the various state ministries. In general, a
medium-term plan is drafted each year, and sets forth for the current year and the four years to come the
projected expenditures that the Baden-Württemberg government believes will be necessary, how funds to meet
those expenditures are expected to be obtained, and how the projected budgetary development will fit into the
projected development of the economy as a whole. The currently applicable plan runs from 2004 to 2008. The
medium-term financial plan assists the parliament in adopting the budget and provides the bases for the next
budget.
Generally, expenditures by Baden-Württemberg are permitted only if they are explicitly provided for in the
budget. In the event that the factual basis for the budget calculation changes significantly during the fiscal year,
the Ministry of Finance must draft a supplementary budget, which also must be adopted by parliament.
The appropriations in the budget are administered by Baden-Württemberg ministries. This administration is
under the unlimited supervision of the State Accounting Office (Landesrechnungshof) of Baden-Württemberg, an
agency organized under public law. The State Accounting Office is strictly separated from the state
administration and is responsible only to parliament.
The following table provides a summary of Baden-Württemberg’s revenues and expenditures for each of the
years indicated:
Revenues and Expenditures
2004 2003 2002 2001 2000
(in billions of EUR)
Revenues (1)(2) .................................................... 31.6 31.4 30.5 31.9 30.6
Taxes .......................................................... 22.3 22.0 21.3 22.1 23.0
Other ........................................................... 9.3 9.4 9.2 9.9 7.6
Expenditures (1)(3) ................................................. 31.7 31.7 31.0 31.7 30.4
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