The German government has finalised its 2020 budget with net new debt of 130.5 billion euros ($158.3 billion), the highest level of annual borrowing in post-war history but still 40% less than originally planned, a government document showed on Tuesday.
Berlin needed less debt because earmarked money for public investment did not flow into projects as quickly as expected, coronavirus aid was not tapped by as many firms as anticipated and the pandemic-related hit to tax revenues was smaller than projected, according to the finance ministry document.
The debt level easily surpassed the previous record of 44 billion euros in 2010 following the financial crisis.
The federal government recorded a structural budget deficit of 1.52% of economic output, the document showed. That was above the deficit limit of 0.35%, but parliament suspended this fiscal rule for 2020 and 2021 due to the pandemic.
Finance Minister Olaf Scholz is planning net new debt of up to 180 billion euros this year to continue rescue and stimulus measures and shield Europe’s largest economy from the impact of a potentially aggressive new wave of infections.
“Despite the pandemic, we have public finances under control,” Scholz said. “We have the strength to keep on countering the coronavirus impact with massive action - and that’s exactly what we are doing.”
Source: Reuters |
