KfW initially stops four promotional programs
The Karlsruhe budget ruling has consequences for the promotional programs of the state development bank KfW. On Wednesday, KfW imposed a temporary freeze on applications and commitments for four programs in the area of housing and construction. With immediate effect and in agreement with the Federal Building Ministry, no more applications can be submitted for these programs until further notice and all existing applications can no longer be approved, the development bank announced on its website.
Development loans and investment grants already approved for these programs are not affected by the budget freeze. Specifically, this concerns the program "Altergerecht Umbauen", the municipal funding program "Energetische Stadtsanierung", the promotion of cooperative housing and the BMWSB hardship program for housing companies as a result of increased energy costs.
Other programs of the development bank could also be affected. "We are in contact with all commissioning departments to determine whether the application and commitment freeze should also be applied to other programs," KfW announced. As part of its promotion, the institute receives funds from various federal ministries, which it uses for investment grants, repayment subsidies or the reduction of interest rates in bank-sponsored loan programs. The respective ministries are currently examining whether and which budget items that they use for KfW funding are affected by the spending freeze, the development bank explained.
Last week, the Federal Constitutional Court declared the reallocation of 60 billion euros in the 2021 budget null and void. The money had been approved as a coronavirus loan, but was subsequently to be used for climate protection and the modernization of the economy. At the same time, the judges ruled that the state may not reserve emergency loans for later years. As a result, further billions of euros for future projects are at risk. As the exact impact on the regular budget is still unclear, the Ministry of Finance decided to block certain commitments of all ministries for future years in the budget as a precautionary measure.
The Federal Government's budget freeze also impacts funding for certain programs at KfW, as they rely on funds from various ministries. KfW banks might need to adjust their lending policies in the household sector due to this financial constraint.
Source: www.dpa.com
