Brussels (Brussels Morning) The three parties set to form the next German government are planning to invest an additional 50 billion euro in the country’s green transition.
Two sources familiar with the plan noted that the parties are preparing a 2021 supplementary budget to boost Germany’s climate fund, Reuters reported on Thursday.
Money from the climate fund is to be used in the coming years to help Germany in its transition away from fossil fuels.
The sources pointed out that the new government plans to finance the move with this year’s unused debt authorisation.
Olaf Scholz, outgoing Finance Minister and Chancellor-designate, temporarily lifted the constitutional debt brake for 2020 and this year to allow the financing of measures aimed at helping workers and businesses weather the coronavirus crisis.
Germany’s record borrowing
Germany took on new debt of some 130 billion euro last year, setting a record, and plans to borrow nearly 240 billion this year.
Sources pointed out that the new government might have to up the 2022 debt plan originally set at 100 billion euro, stressing that the latest wave of coronavirus infections and the government’s response could force its hand.
Before COVID-19 cases started surging, incoming Finance Minister Christian Lindner described the 2022 debt plan as sufficient.
The three parties are to seal a coalition deal on Wednesday, which would allow Scholz to be sworn in at the start of December.
In the coalition agreement, the parties agreed to extend the repayment period of the coronavirus crisis debt, with the first repayment to be pushed back five years and the repayment period to be stretched from 20 to 30 years.
According to estimates of officials, the move would allow additional borrowings of roughly two billion euro per year from 2023 to 2025 and close to 10 billion per year from 2026 onwards.