At around 78 billion euros, the real net borrowing is four times higher than that shown in the federal budget.
(Photo: IMAGO/Christian Spicker)
Berlin In a new report, the Federal Court of Auditors takes a hard stance on the federal government. The current budget draft for the coming year is completely non-transparent, the actual debt is four times higher than officially reported.
The budget draft by Federal Finance Minister Christian Lindner (FDP) does not make “the true state of federal finances” clear. The shifting of expenses and debts to special funds as well as accounting practices distorted the picture, writes the Federal Court of Auditors in its analysis for the deliberations on the 2023 federal budget, which is available to the Handelsblatt.
The budget will be discussed in the Bundestag next week. The representatives of the Federal Ministry of Finance will then have to listen to a lot, because the Court of Auditors gives the opposition many arguments to criticize the budget draft.
According to the Court of Auditors, the federal government has outsourced numerous expenditures for important policy areas to special funds that could actually be financed from the normal budget.
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For example, there is a climate fund, a special fund for digital infrastructure or the new special fund for the German armed forces. For these secondary budgets, the federal government took on debt outside of the regular budget. In addition, the federal government is using the previous reserve for refugees to fill short-term budget gaps. After all, this reserve contains 48 billion euros.
Court of Auditors calls on federal government to save
If you take all these expenses into account, the true debt in 2023 would not be 17.2 but 78.2 billion euros, the Court of Auditors calculates. This is also a problem because it “severely restricts the function of the debt rule”.
However, with the turnaround in interest rates initiated by the European Central Bank (ECB), the federal government will already be close to the 2013 level again in 2023.
(Photo: dpa)
The debt brake enshrined in the constitution is intended to guarantee that the federal government only gets a small amount of debt in normal economic times. From the point of view of the Court of Auditors, however, the federal government is increasingly circumventing the debt rule with shadow budgets – and thus weakening its credibility. “The further considerable open and hidden indebtedness of the federal government must be ended,” the Court of Auditors demands.
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The Federal Court of Auditors sees a further danger, even an “explosive device” for the federal budget in the “exploding interest expenditure”. For years, the federal government’s spending on new debt had fallen to new lows, thanks to record-low interest rates.
With the interest rate turnaround initiated by the European Central Bank (ECB), the federal government will already be close to the level of 2013 again in 2023. At that time, the federal government spent around 30 billion euros on interest. According to the Court of Auditors, this “restricts the scope for design”.
100 billion euro special fund to support the Bundeswehr.
(Photo: dpa)
Parliament and the federal government should therefore not succumb to the temptation “to flee into even more debt in view of the multiple crisis situation with further expenditure to be expected”. Instead, “clear, possibly painful decisions are needed to stabilize the federal budget at a sustainable and responsible level,” writes the Federal Audit Office.
In other words: the Court of Auditors is calling on the federal government to make savings. “Only in this way can the debt rule take full effect again.”
The opposition agrees. So says Union budget politician Christian Haase: “The situation of state finances and the federal budget is highly dramatic. A return to the debt brake and a solid budgetary path is all the more important. The SPD and the Greens should finally stop their disruptive fire and their agitation against the debt brake.”
Lindner wants to clean up the special assets
However, the requirement is controversial. Many economists are of the opinion that the federal government should not step on the austerity brakes before the foreseeable recession in autumn and winter of this year. This will only exacerbate the crisis and possibly lead to social unrest.
Federal Finance Minister Lindner knows the criticism of the Court of Auditors. He had already announced that he wanted to clean up the special assets. First, however, he had to create a new sub-budget with the special fund for the Bundeswehr after Russia’s attack on Ukraine, so that the budget would not get into trouble as a result of the additional spending of 100 billion euros.
Lindner also credits himself with getting the federal government to cut back on staff after years of sharp growth in the number of civil servants. But here, too, the Court of Auditors complains that there are in fact no real job cuts. Because the 4,000 jobs that Lindner wants to cut are faced with 30,000 open positions. The 4000 positions could therefore easily be taken from the pool of vacant positions.
The Federal Court of Auditors also criticizes elsewhere. The federal government is financing more and more “state expenditure with dubious effectiveness”. Between 2022 and 2026 alone, the federal government lost around 100 billion euros through waivers in favor of the federal states.
>> Read here: More government debt can make Germans richer – a guest comment
While the federal government is planning debts of around 140 billion euros in 2022, some federal states are already achieving billions in surpluses again this year. Around the middle of the year, Berlin reported a surplus of 2.3 billion euros.
In fact, the federal government finances the balanced budgets of the federal states and has “weakened its own financial base”. The federal government must again take more account of its own financial situation compared to the federal states.
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