German Court of Auditors slams Scholz gas price cap of €200bn – Reuters
Germany’s Federal Court of Auditors on Thursday sharply criticized the government for its plan to cap gas prices, implicitly accusing the government of circumventing debt rules with a 200 billion euro special fund to cover the plan.
The sentencing came shortly after German Chancellor Olaf Scholz announced the introduction of a gas price cap to serve as a ‘big defensive umbrella’ to protect households and businesses from rising gas prices. . The price to pay: 200 billion euros in new debt.
The debt posed potential problems for German Finance Minister Christian Lindner, who adamantly opposed new debt under the German budget. That would force Lindner to back down from his long-held goal of tightening Germany’s constitutional debt brake next year. To circumvent the rules, gas price cap debt will be filed in an economic stabilization fund that falls outside the regular budget.
In emailed comments to POLITICO, the president of Germany’s Federal Court of Auditors Kay Scheller blasted the budget fraud.
“Special funds create non-transparency. They obscure budget truth and clarity,” Scheller said.
Although Scheller did not directly quote the 200 billion euro special fund, his comments made it clear that he disagreed with the government’s strategy of placing such a massive amount of new debt outside the ordinary budget.
Basically, Scheller challenged Lindner’s argument that pumping new money into the economy through a special fund was different from ordinary debt, which can potentially increase inflation.
“When the money comes out of special funds, the state has to borrow. At the end of the day, special funds, even if they are not called that, are federal debt,” said the chairman of the court of accounts.
Lindner had argued at a press conference in Berlin on Thursday that he wanted to “clearly separate crisis spending from our regular budgetary management”, insisting that the government remained committed to a conservative fiscal policy aimed at limiting the inflation, which is expected to reach 10% in Germany.
“We want to send a very clear signal to the capital markets: even if we now use such a defensive umbrella, Germany will stick to its fiscal policy focused on stability and sustainability,” Lindner said. He also said Germany would not follow the UK’s lead “on the path of expansionary fiscal policy”.
Scheller further argued that the German government‘s increasing reliance on special funds lacked parliamentary control.
“The federal budget is subject to the principles of unity and comprehensiveness and should thus enable Parliament and the public to grasp the budgetary situation at a glance,” Scheller said. “However, due to the large number of special funds, a good overview requires many subsidiary accounts. Of course, this also makes parliamentary control more difficult.”
In addition to the €200 billion fund, the government has also set up a €100 billion special fund for the modernization of the German armed forces as well as a €60 billion climate fund. According to the German Ministry of Finance, Germany had 26 non-regular special funds in 2020.
“That brings us to around 360 billion euros in new debt this year alone,” Friedrich Merz, the leader of Germany’s center-right opposition bloc, criticized at a press conference on Thursday, comparing it to the budget. Germany’s ordinary debt of 496 billion euros for 2022. .
“It’s almost as much as an entire federal budget that is now piled up in the shadow budgets of the federal government,” said the leader of the Christian Democratic Union (CDU).
