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(Bloomberg) — German Economy Minister Robert Habeck canceled his participation in the COP28 weather convention and in the Middle East to attend talks in Berlin on resolving the country’s fiscal crisis.
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Chancellor Olaf Scholz requested that Habeck stay “in order to make further progress in the talks on the 2024 budget following the ruling of the Constitutional Court,” an Economy Ministry spokeswoman said in a statement Sunday. Scholz, Habeck and Finance Minister Christian Lindner of the pro-business Free Democrats had talks on Sunday evening and are expected to continue them throughout the week.
Germany has been grappling with a fiscal dilemma since mid-November, when the country’s highest court ruled that the allocation of 60 billion euros ($65 billion) in unused climate coverage aid in the face of the Covid-19 pandemic to the special foreign budget. The normal budget is unconstitutional.
The Ministry of Finance froze the existing budget and the two most important special funds, and declared a state of emergency for 2023 in order to repair this year’s budget.
Lindner has known a deficit of 17 billion euros for next year and needs to make up for it with cuts in social spending. Scholz’s Social Democrats and Habeck’s Greens must suspend the so-called debt brake, a restriction on new federal borrowing, in 2024 and take on new debt to cover the deficit in order to invest in Germany’s blank energy transition.
Habeck, who is also the vice chancellor and in charge of climate affairs, expressed optimism late Sunday that the coalition is “well on the way to reaching an agreement.”
“I can’t speak for everybody, but I repeat that I think we’re making smart progress,” Habeck said in an interview with public broadcaster ARD. “It’s a difficult process, that’s clear, but it’s progressing. “
Habeck had planned to attend the United Nations meteorological convention in Dubai on Tuesday, followed by visits to Oman, Saudi Arabia and Israel. The holiday has been postponed until the next conceivable date, the spokesperson said.
–With Iain Rogers.
(Updates with Habeck comments starting in sixth paragraph)
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