German defense investment will double country’s 2022 debt
Politico | Finance Minister Christian Lindner has announced €200 million in new debt for this year, with the possibility of substantially more.
According to German Finance Minister Christian Lindner, the government had projected to incur €99.7 billion in normal debt this year.
According to Finance Minister Christian Lindner, Germany will incur at least €200 billion in debt this year, half of which is due to a special fund to enhance defense spending amid Russia's war against Ukraine.
Lindner told reporters in Berlin that due to economic "uncertainties" created by the war in Ukraine and the resulting increase in energy prices, as well as the large influx of Ukrainian refugees, Germany's debt could rise even higher this year.
As a result, Lindner stated that he would shortly offer a supplementary budget to meet these anticipated additional costs, including planned financial remedies for individuals dealing with rising energy and gasoline prices.
According to Lindner, the government had intended to accrue €99.7 billion in normal debt this year. However, Germany's recently announced commitment to invest €100 billion in its chronically under-equipped army, the Bundeswehr, has more than doubled that figure.
At the end of last month, German Chancellor Olaf Scholz suggested the €100 billion special fund as part of a significant shift in German defense and security strategy. It was unveiled just days after Russia's invasion of Ukraine began.
"We need planes that fly, ships that sail, and soldiers that are adequately equipped for their jobs," Scholz stated at the time, guaranteeing that Germany would continue to spend 2% of its yearly economic output on defense in the future.
Lindner's presentation of the German budget for 2022, which has already been approved by the government but still requires legislative approval, included the announcement of a legislative proposal to enshrine the defense fund in the constitution, ensuring that the funds can only be used for military purposes.
The finance minister also stated that he hopes to reinstate Germany's constitutionally mandated debt ceiling by 2023, which was temporarily suspended due to the coronavirus pandemic, and that Germany will adhere to the EU's Maastricht criteria of not exceeding 60% of GDP by the second half of this decade.