Germany's finance ministry will determine what effect the government's new economic forecasts will have on next year's budget after the latest tax estimates are published later this month, Finance Minister Christian Lindner said on Friday.
The Spiegel news outlet reported that Germany could raise an additional 5.2 billion euros ($5.69 billion) more debt while complying with its debt brake, for a total of 56.5 billion euros, due to the government's weaker economic forecasts.
The finance ministry declined to comment on the figures.
Germany's economy was already the weakest among its large euro zone peers and other G7 countries last year, with a 0.3% decline in gross domestic product. The latest forecasts this week pointed to another contraction this year.
Under the cyclical component of Germany's constitutionally enshrined borrowing limits, known as the debt brake, the government can borrow more when economic development is weaker than initially predicted.
"News on the budget from the finance ministry will only be available after the tax estimate," Lindner wrote on the social media platform X.
The new tax estimate is due to be published on Oct. 24.
In the most recent tax estimate in mid-May, experts predicted that the federal, state and local governments would have to make do with a total of 80.7 billion euros less between 2024 and 2028 than had been initially expected in autumn 2023.
Government spokesperson Wolfgang Buechner said the government would wait until the end of October before making a decision on whether it would fully use the additional borrowing room allowed by the debt brake.
Nevertheless, this new debt is unlikely to solve the funding shortfall of 12 billion euros in next year's budget, as the debt brake allows this flexibility to compensate for lower tax revenues during a downturn, a finance ministry source told Reuters.
($1 = 0.9137 euros)
