Germany to Use EU Funds to Trim About 15 Billion Euros From Debt
Germany to Use EU Funds to Trim About 15 Billion Euros From Debt
(Bloomberg) -- Germany will use its share of the European Union’s rescue program to avoid taking on more debt rather than fund new growth initiatives.
Chancellor Angela Merkel’s coalition agreed to spend about 15 billion euros ($18 billion) from the EU on existing programs, including measures already part of Germany’s stimulus plan as well as the country’s coal exit, according to people familiar with the discussions.
The goal of the deal, agreed on Tuesday in Berlin, is to keep new debt in check in 2021 and 2022, when the funds roll in, said the people, who asked not to be identified because the discussions are private.
The deal indicates that Germany’s government is veering back toward its traditions of budget discipline after suspending constitutional debt limits to counter the fallout from the coronavirus crisis.
Over the next two years, Germany will receive 15.2 billion euros in grants from the EU, parliamentary papers show. By comparison, the country has made 1.2 trillion euros available to prop up its pandemic-hit economy.
The only new initiative for the EU funds is a 500 million-euro program to buy laptops and other equipment for schools, officials from the governing parties said Wednesday.
Finance Minister Olaf Scholz said Tuesday he is seeing signs that the economy is recovering better than expected. That’s spurring calls from Merkel’s Christian Democratic Union to return to fiscal discipline, the people said.
Merkel’s administration forecasts Europe’s largest economy to contract by 6.3% this year and grow by 5.2% in 2021. The government is expected to revise its projections up in September, people familiar with the discussions said.
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