According to the information disclosed by the German Federal Finance Department on the 19th local time, affected by the coronavirus epidemic, the German government’s net new debt in 2020 reached 130.5 billion euros, surpassing 44 billion euros during the previous financial crisis in 2009, and a record high.
However, compared with the Federal Parliament breaking the debt red line last spring and approving that the government can borrow 280 billion euros, this figure is still much lower.
In response, the Treasury Department explained that it was because the German economy was in a better recession than originally worried, and the government’s tax revenue in 2020 was higher than expected, while spending on epidemic assistance and social security was lower than expected.
At the same time, the Ministry of Finance further added that a large proportion of the aid funds in November and December last year have only been distributed to the applicant enterprises until now, which also caused government spending to fall short of the planned value.
German Federal Finance Minister Scholz stressed on the 19th that Germany’s “unswerving relief measures” have had the due effect, including investing heavily in health security, supporting the economy and ensuring employment.
He said that despite the heavy blow from the epidemic, Germany’s fiscal situation is “still well controlled” and the government has the ability to continue to take large-scale measures to deal with the crisis.
It is worth mentioning that according to the budget of the German Federal Finance Department, the country’s net new debt is expected to continue to rise in 2021 to a record 180 billion euros.
Among them, the government plans to provide 40 billion euros for enterprise assistance and 35 billion euros for other expenditures related to epidemic prevention and control.
The Ministry of Finance believes that even if the third round of transitional subsidies is decided to expand, the expenditure is still within the reach of the government budget.