According to the German Federal Ministry of Finance on the 19th local time, affected by the new crown epidemic, the German government’s net new debt in 2020 reached 130.5 billion euros, exceeding the 44 billion euros during the previous financial crisis in 2009 to set a record high. However, compared with the Federal Parliament breaking the debt red line last spring and approving the government to borrow 218 billion euros, this number is still much lower.
In response, the Ministry of Finance explained that it was due to the fact that the recession of the German economy was better than originally worried and that the government’s tax revenue in 2020 was higher, while the expenditure on epidemic assistance and social security was lower than expected. At the same time, the Ministry further added that a large part of the assistance payments in November and December last year were only distributed to the applicant enterprises, which also caused government expenditures to not reach the planned value.
Scholz, German Federal Finance Minister, emphasized on the 19th that Germany’s “unswervingly adopted relief measures” have had their due effect, including large investments in health protection, economic support and employment. He said that despite being hit hard by the epidemic, Germany’s fiscal situation was “still good and controllable” and the government is capable of continuing to take large-scale measures to deal with the crisis.
It is worth mentioning that according to the budget of the German Federal Ministry of Finance, the country’s net new debt is expected to continue to rise in 2021, reaching a record 180 billion euros. Among them, the government plans to provide 40 billion euros for corporate assistance and 35 billion euros for other expenditures related to the prevention and control of the epidemic. The Ministry of Finance believes that even if it decides to expand the scale of the third round of transition subsidies, expenditures are still within the affordable range of the government budget.