2024-04-12 18:40:27
Can Germany still meet the two percent target after the end of the Bundeswehr’s special funds? The finance minister has an idea and explains it for the first time. Some find this negligent.
Finance Minister Christian Lindner sees scope for up to nine billion euros in the federal budget from 2028 to increase the defense budget. With disciplined budget management, the debt ratio will then be below the 60 percent of economic output required in the EU, the FDP leader told the dpa.
“If we fall below this limit, then the repayment of the Corona debt planned from 2028 could be discussed again.” The money could instead flow into the defense budget.
The federal government took out emergency loans worth around 300 billion euros in 2020, 2021 and 2022 due to the Corona crisis and the war in Ukraine. The repayment is actually scheduled to begin in 2028 and run for more than 30 years. Currently, debt repayment of nine billion euros is planned annually from 2028, said Lindner.
“But if the burden of the pandemic on debt has already been overcome, the repayment could be significantly reduced,” he announced. “This would provide billions of dollars that will help us reach the NATO target in the federal budget after the end of the special program for the Bundeswehr.”
Headwind from the Union and also the SPD
The Union criticized Lindner for questioning the debt brake. The repayment of the emergency loans is constitutionally required, said parliamentary group vice-president Mathias Middelberg (CDU). Postponing it until St. Nicholas Day is “the new desperate search for ways to circumvent the debt brake.”
Lindner also faced headwinds from the ranks of the traffic light coalition: SPD budget politician Andreas Schwarz emphasized that the nine billion euros were “not even remotely enough.” “It sends the wrong message to Putin and our allies if we make compliance with the two percent target dependent on Corona repayments or Maastricht criteria, which almost only Germany can achieve in Europe anyway,” he told the Bavaria media group.
Forecast for debt ratio: 2028 below Maastricht ratio
Before the corona pandemic in 2019, the federal government had already achieved a debt ratio of 59 percent and had thus met the European Maastricht criteria again after a long period of time. Due to the pandemic-related loans, the rate rose rapidly to 69 percent. It is now back to around 63 percent of gross domestic product. “If we continue to pursue this line, we can actually be at the pre-Corona level as early as 2028,” said Lindner.
This year has so far been considered particularly difficult in terms of budget policy, because then the 100 billion euro special fund for the Bundeswehr could also be used up. This means that the federal government must cover defense spending entirely from the normal budget – and to such an extent that Germany meets NATO’s two percent target.
Billion gap in the two percent target
We hear from those around the Ministry of Finance that an additional 25 billion euros would have to be raised for this. Even if the federal government were to completely forego repayment of the Corona debt, there would still be a gap. In order to raise the remaining amount of around 15 billion euros, reallocations from the other budgets would be necessary. Lindner was nevertheless optimistic: “If we manage to strengthen our economic growth in the years up to 2028 and if we forego additional costly, legally binding social spending, then we will manage to meet the two percent target,” he said.
Schwarz criticized that Lindner should rather think about the debt brake and reflect the international commitments in the budget. Middelberg, on the other hand, called for savings in citizens’ money, international financial aid and funding programs. Lindner identified this savings potential himself in December, but was unable to assert himself in the traffic lights. “He should now draw the political conclusions from this,” explained Middelberg.
The left-wing defense politician Dietmar Bartsch, on the other hand, emphasized: “Any leeway in the budget should not be wasted on more armaments, but should primarily serve to combat child poverty, which has reached a new record level in Germany.” The Bundeswehr does not have a money problem, but rather a procurement problem. As long as this is not resolved, billions more will be a waste of tax money.
Special funds are intended to provide financial security for the development until 2027
The federal government has declared a military turning point in response to the Russian war of aggression against Ukraine. Russia is now again classified as a security threat and there are warnings that Kremlin ruler Vladimir Putin could also attack other European countries. The declared goal of Defense Minister Boris Pistorius (SPD) is to make the Bundeswehr “war-ready”.