Berlin, Nov 23 (EFE) – German Finance Minister Christian Lindner announced Thursday that he will present a supplementary budget for 2023 to provide legal certainty to public spending, which was left vulnerable after the Constitutional Court annulled the transfer of 60 billion euros to a fund for economic transformation.
The ruling blew a hole in this year’s spending plan and triggered a budget crisis in Europe’s largest economy, which is already expected to contract in 2023.
The government froze public spending in response to the ruling, and on Thursday liberal minister Lindner said via social media that the government would also ask parliament to declare an extraordinary state of emergency, which would allow the deficit to exceed the 0.35% of GDP limit set by the mechanism known as the debt brake.
However, Lindner, leader of the Liberal Party, which has made fiscal soundness one of its hallmarks, insisted that “no new debt will be incurred,” but that the intention is only to give a “secure legal basis” to the funds already spent to alleviate the crisis caused by high energy prices.
A supplementary budget is needed to give a “constitutionally sound basis” to electricity and gas price subsidies, the liberal minister said.
The decision was made in coordination with Chancellor Olaf Scholz and Vice Chancellor and Economy Minister Robert Habeck, the finance minister said in a brief appearance in Berlin.
Germany’s highest court ruled last week that Chancellor Olaf Scholz’s government had acted improperly when it shifted money originally borrowed in 2020 to fight the coronavirus to a new fund set up to finance environmental projects and green technology.
The constitutional ruling has left a hole in the budget that goes far beyond the 60 billion euros in question and is forcing the government to review all extraordinary budgets that are in operation.
Lindner said it was the first time the court had ruled “comprehensively” on the debt brake mechanism, which limits annual deficits except in exceptional circumstances.
“(The ruling) provides legal clarity on how to deal with extraordinary budgets. We are drawing conclusions from it,” said the minister.
Meanwhile, the Bundestag postponed the debate on the 2024 budget, raising the possibility that it will not be possible to complete the parliamentary process before the end of the year.
In 2009, Germany introduced the so-called debt brake into its constitution, limiting annual borrowing to 0.35 percent of gross domestic product, with exceptions allowed only in emergencies.
The debt brake has already been suspended in 2020, 2021 and 2022 because of the pandemic and the energy price crisis linked to Russia’s invasion of Ukraine. EFE
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