The German government has approved the national budget for 2023, with projected revenues and expenditures of around 445 billion euros ($463 billion), 10 per cent less than in 2022.
Since Europe’s largest economy is scrambling to return to a balanced budget, for the first time since the start of the Covid-19 pandemic, the new budget is to be in line with the country’s so-called debt brake, reports Xinhua news agency.
After taking on new debts of almost 140 billion euros this year, Germany’s national budget for 2023 only provides for 17 billion euros in new debt.
Adherence to the debt brake, which requires a balanced budget and was first activated under former Chancellor Angela Merkel back in 2009, is of “great importance”, Minister of Finance Christian Lindner said on Friday while presenting the federal budget.
“Anyone who incurs permanently high debts will at some point have to turn the tax screw to serve old debts, and in the end that is nothing other than strangulation of our entire economy,” he added.
Germany is seeking to further reduce new borrowing in the coming years. From 2024 to 2026, the government only wants to take on debt of between 12.3 and 13.8 billion euros each year.
In the first quarter of 2022, Germany’s public debt fell by 992 million euros compared to the previous quarter, according to the Federal Statistical Office (Destatis).
Mostly due to “actions taken to address the Covid-19 pandemic”, public debt had previously grown to 2.32 trillion euros.
The larger budget this year also included a supplementary budget of around 40 billion euros for “measures directly related to the consequences” of the Russia-Ukraine war, the Federal Ministry of Finance said.
In addition to the ongoing pandemic, Germany’s 2023 budget will continue to be shaped by the “burdening factor” of the conflict, the government said.
Consequently, the budget will provide 5 billion euros for “global crisis prevention”.