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(Bloomberg) — German Chancellor Olaf Scholz’s government approved a supplemental budget for 2023 that includes postponing regulations restricting new borrowing for a fourth straight year.
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Scholz’s coalition was forced to lift the so-called debt brake once again after a ruling this month by the country’s highest court meant that tens of billions of euros of special budget debt would have to be accounted for in the normal federal budget.
While this means Germany is expanding its debt burden, it is increasing its net debt figure for this year from 25 billion euros ($27. 4 billion) to 70. 6 billion euros, according to the Finance Ministry. In the initial plan for 2023 approved at the end of last year it amounted to 45. 6 billion euros.
“We are not going to take on any more debt this year,” Finance Minister Christian Lindner said in an email on Monday.
Lindner had first insisted on reinstating the loan facility this year after it was suspended to help the government cope with the fallout from the Covid-19 pandemic and energy crisis.
The government will want to include more extra-budgetary loans in next year’s funding plan. It forecasts around €22 billion of new federal debt by 2024, but this figure is now expected to reach around €40 billion.
Lindner, the leader of the Free Democrats, is under increasing pressure from his coalition partners – Scholz’s Social Democrats and the Greens – for a further suspension of the debt brake next year.
There have also been calls, across political differences, for borrowing regulations to be reviewed to allow Germany to make big investments in its transition to a cleaner, more technologically complex economy.
Such a move would require a two-thirds majority in parliament and therefore that of the main opposition conservatives, who have filed a lawsuit challenging the use of the special funds.
Lindner’s revised budget for 2023 will now be sent to Parliament for approval, with the first debate scheduled for Friday morning. Scholz will meet with Bundestag lawmakers on Tuesday at 10 a. m. in Berlin on the implications of the court’s decision.
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