https://sputnikglobe.com/20231122/germany-freezes-spending-as-top-court-blocks-diverting-previously-earmarked-covid-funds-1115126226.html

Germany Freezes Spending as Top Court Blocks Diverting Previously Earmarked COVID Funds

Germany Freezes Spending as Top Court Blocks Diverting Previously Earmarked COVID Funds

Sputnik International

Germany's financial framework includes 29 separate funds outside the main budget, amounting to around €870 billion. With a freeze on government expenditure, the country's fiscal plans have been thrown into uncertainty, as vital projects take a hit.

2023-11-22T13:36+0000

2023-11-22T13:36+0000

2023-11-22T13:36+0000

economy

europe

newsfeed

christian lindner

olaf scholz

germany

free democratic party (fdp)

finance ministry

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Chancellor Olaf Scholz and his cabinet are contending with the aftermath of this decision that prohibits reallocating pandemic relief funds for different purposes. The verdict by the Federal Constitutional Court questions the legality of several hundred billion euros in special funds.In response, the Finance Ministry announced a freeze on almost all new spending approvals for 2023, permitting only current liabilities and exceptional new obligations, impacting all federal ministries except for certain key institutions.The court's ruling has made Berlin's financial strategy uncertain, impacting critical projects like the chip and battery manufacturing subsidies and crucial investments in the national railway network.Source: Federal Audit Court, Germany's Ministry of FinanceThe upheaval has been so consequential that senior officials have had to cancel public appearances to address the crisis. Last week’s judicial ruling stated that the €60 billion earmarked for the pandemic response cannot be repurposed for other initiatives, like advancing green manufacturing practices or boosting solar energy production.Pandemic Funds Untouched, and Its Consequences for GermanyVice Chancellor of Germany and Federal Minister for Economic Affairs and Climate Action Robert Habeck has indicated that the judgment's impact could extend to other special funds, including those designed to mitigate the effects of high energy prices on households and companies.Furthermore, Finance Minister Christian Lindner faces the daunting task of incorporating at least €30 billion of new debt into a modified 2023 national budget, per sources familiar with the matter. This requirement could derail his plans to reinstate constitutional rules that limit new borrowing, a cornerstone policy of his business-friendly Free Democratic Party.Politicians ReactThe court's verdict has also ignited internal debates within the coalition government, consisting of Scholz’s Social Democrats, the Greens, and the fiscally conservative FDP. During an interview with a media outlet, SPD General Secretary Kevin Kuehnert said that the party is devoted to sourcing the necessary funds to address the €60 billion shortfall created by the court's decision. Emphasizing the importance of funds for Germany’s international competitiveness and climate goals, Kuehnert firmly rejected any proposals for cuts in social benefits.Overall Financial ContextGermany's financial framework includes 29 separate funds outside the main budget, amounting to around €870 billion.Interestingly, the €100 billion fund allocated for military spending is not expected to be affected by the court's ruling, as it is constitutionally protected.The process of finalizing next year’s federal budget, initially scheduled for completion last week, has been delayed due to the court's decision. Budget lawmakers are now planning to reconvene this week, alongside experts, to deliberate on the next necessary steps.

https://sputnikglobe.com/20231030/new-economic-downturn-shows-germany-recession-bound-1114592770.html

germany

2023

News

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europe’s largest economy, chancellor olaf scholz, germany's constitutional court verdict, german federal budget, vice chancellor of germany and federal minister for economic affairs and climate action, robert habeck, german finance minister christian lindner, spd general secretary kevin kuehnert.