German government seeks solution to budget crisis

- Finance Minister Lindner says government will prepare supplementary budget for 2023

- Decision comes after constitutional court cancels re-allocation of $65B from unused coronavirus funds

BERLIN

German Chancellor Olaf Scholz’s coalition government is under pressure to find a solution to the budget crisis, as concerns grow over the €60 billion ($65 billion) hole in government finances.

Coalition partners have postponed Thursday’s parliamentary commission meeting on 2024 spending plans due to their disagreements on how to fix the financing gap without undermining climate investments and defense procurement plans.

Germany’s constitutional court ruled last week that the government’s re-allocation of €60 billion ($65 billion) from unused coronavirus funds was not legal, forcing the government to revise its spending plans and restrict the special off-budget funds.

Finance Minister Christian Lindner told reporters on Thursday that he is planning to first prepare a supplementary budget for 2023, and then begin discussions with partners on the next year’s spending plan.

“In consultation with the Federal Chancellor and the Vice-Chancellor, I will present next week a supplementary budget for this year,” Lindner said, adding that this is needed following the constitutional court’s decision.

“We will now place the expenditures, particularly for the electricity and gas price cap, on a constitutionally secure basis. This supplementary budget is required for this,” he added.