The traffic light coalition takes a lot of time to reduce the debt burden that has increased in the corona emergency.

If the black-red government had only given itself twenty years to pay off the pandemic loans, the SPD, Greens and FDP want to orient themselves towards the EU, which in turn wants to give itself thirty years.

But anyone who thinks that the newcomers in Berlin have extended the deadline by half is subject to deception.

Because Brussels wants to start reducing the credit burden after 2027, i.e. 2028 at the earliest. At the same time, the financial planning for the federal government provided for the second Corona credit tranche to be processed in 17 years (from 2026 to 2042 inclusive).

Now they want to be finished 15 years later.

All in all, you get a deadline extension of 75 percent. 

Manfred Schäfers

Business correspondent in Berlin.

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The traffic light partners provided the delay project with linguistic loops: They wanted to combine the plans for the oversized net borrowing in the years 2020 to 2023 in a "total repayment plan", "in order to guarantee a coherent and sustainable debt repayment", they formulate, and then on to refer to the EU as a role model. But this is a pattern of no value, as other rules apply to Brussels (which actually do not provide for borrowing). The government of Olaf Scholz (SPD) will have to align itself with the Basic Law. There it says: The repayment of the oversized loans "must take place within a reasonable period of time". Did the fathers and mothers of this norm imagine that more than a generation will be taken? Probably not.The intention is more likely to have insisted on a swift repatriation in order to prevent a new crisis from affecting the state before it has processed its old burden.

The advantages of the debt brake

The financial scientist Niklas Potrafke from the Ifo Institute in Munich is following the traffic light efforts to untie the financial corset with growing concern.

"The SPD, Greens and FDP want to initiate many new projects, but the financing remains unclear," said the head of the Center for Public Finance and Political Economy of the FAZ.

Others would then have to live with the consequences. The coalition is elected for four years and may no longer be in power if the new repayment plan gets serious. “The debt brake has one major advantage: it forces politicians to set priorities.” But in the first practical test, the traffic light parties discussed how to defuse the requirement. "I do not understand that. When it comes to climate protection, politicians insist that the interests of the next generation be taken into account, but it is obviously less present in financial policy. "

The Ifo Institute has recorded new debts and planned repayments for each federal state in a table. These also take out considerable emergency loans in the pandemic. In normal times they are not allowed to go into debt. The benchmarks for them are the Basic Law, their state constitutions and their financial regulations. In most cases, they also talk about a reasonable period of time when it comes to repayment. The federal government could therefore more easily compare itself with the federal states than with the EU. The overview of the institute (as of November 25) shows a wide range: Saxony, for example, wants to repay its borrowing (up to 6 billion euros) in eight years at the latest. Thuringia is just as ambitious. Rhineland-Palatinate wants to repay its loans in line with the economic cycle, starting with 4 percent in 2024,then with 4 or 6 percent depending on the economic situation, so in 25 years at the latest you would be through.

Take a breath for the coalition

Mainz thus moves in the canon of most countries, which are in the range of twenty to thirty years.

Exceptions are Saxony-Anhalt and North Rhine-Westphalia with forty years and “maximum” fifty years.

Black and yellow rule in Düsseldorf.

This is politically significant, because it makes it difficult for the Union to attack the traffic light government because of the extended repayment.

The word repayment should actually be in quotation marks at the federal government - contrary to what the word suggests, the credit burden is not really reduced. Rather, the permissible new borrowing is only depressed. As finance minister, Scholz predicted a repayment of 2 billion euros for the year after next. That would have reduced the permissible new debt of 0.35 percent of the gross domestic product or around 13 billion euros. The starting value is slightly higher or lower depending on the economic situation. The SPD, Greens and FDP have announced another change in their contract that is relevant in this context: In the case of special funds, they only take into account the allocation of funds, not their expenditure. In 2020, the Energy and Climate Fund alone received 26 billion euros.Other shadow households also received one or the other billion. According to the politically outdated financial plan, the “repayment” should increase to 20.5 billion euros from 2026 onwards. Now you have to recalculate. One thing is already clear: the coalition is breathing space.