Government faces a larger billions hole in the budget
In the household of the Federal Government, there is a significant billion-dollar gap. And it's bigger than previously estimated: Around 48 billion euros are missing - nearly ten billion more than previously calculated. The reason for this is the repayment of crisis loans.
According to a media report, the budget gap in the financial plan presented by the Federal Government for the years up to 2028 is significantly larger than previously known. The "Spiegel" reports, citing information from the Federal Ministry of Finance, that the reason for this is that Finance Minister Christian Lindner did not take into account the first repayment rate for Corona crisis loans of 9.2 billion euros in his budget plan for 2028.
Lindner had announced a budget gap of 39 billion euros - in reality, according to the "Spiegel", it is currently around 48 billion euros based on current legal provisions. "The Federal Government proposes to write off the repayment until zero, as long as the overall government debt ratio, as expected, is close to the upper limit of the Stability and Growth Pact of 60 percent of Gross Domestic Product in the year 2028," the Ministry told the "Spiegel" upon request.
The budget draft for 2025 was approved by the Federal Cabinet this week, as was a supplementary budget for 2024 and the financial plan for the years up to 2028. For the coming year, expenditures of 480.6 billion euros and a new borrowing of 43.8 billion euros are planned. The debt brake requirements would be met only barely, but there are some harsh cuts. The remaining billion-dollar gaps in the budget are initially intended to be closed only in the budget implementation.
Despite the announcement of a budget gap of 39 billion euros by Finance Minister Christian Lindner, the actual gap based on current legal provisions is estimated to be around 48 billion euros due to the omission of the first repayment rate for coronavirus crisis loans. This large domestic policy issue has led to concerns about the state debt and the adherence to the Stability and Growth Pact's debt ratio limit.
