By Andreas Kissler
BERLIN (Dow Jones) — Federal Minister of Finance Christian Lindner (FDP) has given the supplementary budget he brought into the cabinet with almost 40 billion euros in additional debt, fueled hopes that the budget will ultimately be more favorable. “It is not possible to say in detail at this point in time how the budget will be finalized in 2022,” said Lindner at a press conference in Berlin. Last year, at the end of the day, 215 billion euros instead of the planned 240 billion euros in debt were necessary, he emphasized.
“Here, too, we don’t yet know what the end of the year will be like. Of course, there are uncertainties in budget execution,” said Lindner at the press conference on the supplementary budget, which the cabinet had approved in the morning. Specifically, he plans to take on further debt of 39.2 billion euros this year. Overall, net borrowing is expected to increase to EUR 138.9 billion. In the previous budget planning, a net borrowing of 99.7 billion euros was planned in the core budget. However, Lindner had already announced a supplementary budget.
According to the new plans, additional expenditure of 26.3 billion euros and reduced income of 12.9 billion euros are to be estimated. This includes funds for the second relief package because of the high energy prices, which the cabinet has launched. It includes, among other things, a flat-rate energy price of 300 euros for all taxpayers, a temporary reduction in taxes on fuel, a 100-euro child bonus and 2.5 billion euros for states and municipalities to finance the 9-euro ticket for public transport. The supplementary budget also includes 5 billion euros for aid to companies because of the high energy prices.
Provision for further economic risks
Lindner emphasized that the budget planning also contains a “buffer” for any further economic damage. 13.7 billion euros of the total additional debt is to be used for expenditure already decided in connection with the Corona crisis, further foreseeable burdens and changed general economic conditions. According to Lindner, 3.7 billion euros are set aside for further risks of economic development.
Next year, new debt should then be significantly lower. “The goal is still to return to the debt brake of the Basic Law in the coming year,” said the finance minister. “Abandoning the debt brake in Germany would affect our credibility on the capital markets,” he warned. The return to the debt brake, on the other hand, makes it possible to meet the Maastricht debt criterion of 60 percent of economic output “over the course of this decade, towards the end”.
According to the financial planning, new debt should be 7.5 billion euros in 2023 and rise to 10.6 billion in 2024, 11.8 billion in 2025 and 13.7 billion in 2026. Lindner emphasized that the significant decline in the coming year will be possible because it is assumed “that measures related to corona in particular will no longer have to be financed by the federal government”. This eliminates an “enormous block of costs”. The Federal Minister of Finance was critical of calls for “measures on consumption taxes” in addition to the relief that had already been initiated. “Beyond this crisis intervention package, I advise against it,” said Lindner.
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(END) Dow Jones Newswires
April 27, 2022 10:20 ET (14:20 GMT)