BERLIN, Nov 29 (Reuters) – German Finance Minister Christian Lindner said on German broadcaster ZDF on Wednesday that this month’s court ruling has thrown the country’s finances into turmoil and that Germany will need to budget 17 billion euros (18.66 billion euros) for its 2024 budget. It said it was facing a shortfall of $1,000,000.
“As for the budget for 2024, we are currently assuming about 17 billion euros,” Lindner said. “For comparison, the total federal budget is 450 billion euros.”
The size of the difference will determine whether the difference can be offset with savings or whether the country’s debt brake will have to be suspended for another year.
Mr Lindner’s Liberal Democrats had previously talked about numbers in the low double digits without giving specific figures, but Katja Mast, a politician from Chancellor Olaf Scholz’s Social Democratic Party, said on Wednesday that the figure would be in the low double digits. ” talked about the difference.
Germany’s Constitutional Court ruled on November 15 that the coalition government’s decision to reallocate €60 billion in unused pandemic-era debt to the Climate Change and Transformation Fund was unconstitutional.
“We did not act intentionally, we did not act negligently,” Lindner said. “But it is clear that this is an extremely uncomfortable and embarrassing moment for the government.”
Germany’s fiscal crisis has broken previous political obsession with fiscal health, and the thirst for much-needed investment is giving new momentum to reforming self-regulatory borrowing limits.
SPD’s Katja Mast spoke in favor of suspending the constitutional debt brake that limits the government’s structural deficit to 0.35% of gross domestic product (GDP).
He cited the costs of the Ukraine war and its aftermath for Germany, as well as the transformation costs of climate change, and said “the SPD is confident that a justification will be found” to declare a state of emergency that would allow the brakes to be temporarily suspended. . Maintaining a neutral economy and social cohesion.
A strong supporter of fiscal discipline, the hawkish Mr Lindner and his Liberal Democratic Party are expected to raise net new debt again next year after the minister announced last week that he would end the debt brake in 2023 following a court ruling. It opposes lifting restrictions on borrowing.
Lindner said Wednesday that he is “not yet convinced whether the conditions for an emergency resolution will be met in 2024.” He expressed doubts, although he said negotiations were ongoing and he was ready to listen to other parties’ arguments.
“My concern is that if we describe the state of emergency for events like this and we do this every year, the realization that at some point a one-off emergency becomes the deplorable and unfortunate new normal. “It’s lacking,” he said.
A German government spokesperson said on Wednesday that no date has been set for the 2024 budget. It could be completed by Christmas, or it could have to wait until January next year.
The government plans to cover a shortfall of around 30 billion to 40 billion euros ($33 billion to $44 billion) in 2024 compared to previous plans, according to German bank Berenberg.
Berenberg said a total of 175 billion euros in spending between 2023 and 2027 could be at risk following the court ruling.
Germany’s Constitutional Court ruled on November 15 that the coalition government’s decision to reallocate €60 billion in unused pandemic-era debt to the Climate Change and Transformation Fund was unconstitutional.
The ruling is expected to increase tensions in Scholz’s already fractious three-party coalition, which has seen its approval ratings slump as it grapples with a series of crises since taking office nearly two years ago. The situation is in a slump, partly due to internal conflict in public opinion.
(1 dollar = 0.9114 euro)
Reporting by Andreas Linke and Maria Martinez; writing by Miranda Murray.Editing: Kim Coghill, Alexandra Hudson
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