Germany Seeks to Raise 2022 Borrowing to About 100 Billion Euros
Germany aims to borrow about 100 billion euros ($120 billion) in additional funds next year -- roughly a quarter more than its previous target -- to mitigate the impact of the coronavirus pandemic, according to a person familiar with discussions.
Heavy government spending is set to continue as Europe’s largest economy grapples with the fallout from the crisis and invests in climate protection. Finance Minister Olaf Scholz will propose suspending constitutional borrowing limits for a third straight year when he presents a draft 2022 budget on Wednesday to the cabinet, which needs to approve the plan and can still change it.
Scholz -- the Social Democrats’ candidate to succeed Angela Merkel as chancellor after September’s election -- is targeting net federal borrowing of around 100 billion euros in 2022, compared with 81.5 billion euros in the government’s earlier plan, said the person, who asked not to be identified ahead of the public presentation. The increase would take the total for this year and next to more than 340 billion euros.
The Finance Ministry didn’t immediately respond to a request for comment.
Germany’s so-called debt brake is designed to prevent the federal government from borrowing more than 0.35% of economic output, except in emergencies. Merkel’s administration got parliamentary approval to suspend the measure in 2020 and again this year to provide financial support for stricken businesses.
Scholz has consistently argued that Germany can afford hundreds of billions of euros in aid thanks to years of budget discipline. He points out that debt as a percentage of national output will still be the lowest among the Group of Seven nations and lower than after the financial crisis just over a decade ago.
Merkel’s conservative bloc is on track to lead the next administration and favors a return to frugality once the coronavirus recedes, while Scholz’s struggling SPD and the surging Greens have pledged to invest in an overhaul of the economy.
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