German coalition parties reach agreement on 2024 budget

• After weeks of crisis talks, Chancellor Scholz, coalition partners agree on budget cuts, savings
• Scholz says $8.6B military aid for Ukraine will not be affected by government’s budget cuts

BERLIN

Germany’s ruling coalition on Wednesday reached an agreement on the 2024 budget after weeks-long crisis talks.

Speaking to reporters in Berlin, Chancellor Olaf Scholz said they have agreed on cuts and savings to fix a €17 billion (about $18.3 billion) gap in the spending plan.

He promised that the budget cuts will not undermine Germany’s climate and energy transition goals, social welfare policies, or its financial and military support to Ukraine.

“We will support Ukraine from the regular budget, as we have planned, and above all for as long as necessary,” Scholz said.

“This includes €8 billion for arms deliveries, financial aid for the Ukrainian budget directly or via the European Union and probably over €6 billion to support Ukrainian refugees here in Germany,” he added.

The coalition had to revise its 2024 budget plan following a constitutional court ruling last month, which stated that the government’s reallocation of unused coronavirus funds to a climate protection fund was not legal.

Upon the insistence of the coalition’s junior partner, the liberal FDP, the coalition partners decided not to suspend the debt brake mechanism and stick to the limits on new borrowing.

Scholz said if the economic situation worsens as a result of Russia’s war against Ukraine, or if other allies reduce their aid to Ukraine, the government may declare an emergency situation and propose lifting of the debt brake for 2024 to allow for increased government borrowing.

The debt brake mechanism, which is enshrined in the country’s constitution, restricts the government’s ability to incur new debt by limiting the structural budget deficit to 0.35% of gross domestic product per year.