A German finance minister has expressed skepticism about a multi-billion euro credit package agreed upon by the Union, SPD and the Greens. Danyal Bayaz, the finance minister of the state of Baden-Württemberg, told the “Frankfurter Allgemeine Zeitung”‘s podcast “Einspruch” on Wednesday that “money alone will not impress Putin” and that “money alone will not solve structural problems.”
Bayaz also expressed a “muddy feeling” in the federal council, referring to the upcoming vote on the reform of the debt brake, when states raise their hands in support of the package. He stated that it is “not yet quite clear” where this will lead in the long run and that “reforms, acceleration and simplification should follow” instead.
The German parliament gave the green light for the credit package on Tuesday and the federal council is set to vote on it on Friday. The package allows for military and security-related expenses above one percent of the nominal gross domestic product to be exempt from the debt brake and also includes funding for civilian protection, the intelligence services and the protection of information systems, as well as for “aid to states illegally attacked”.
Additionally, the package enables the establishment of a special fund of 500 billion euros, with the corresponding credits also being exempt from the debt brake. The Greens had succeeded in changing the purpose of the funds from “for investments in infrastructure” to “for additional investments in infrastructure and for additional investments in achieving climate neutrality by 2045”.
The package allocates 100 billion euros for state investments and another 100 billion euros for the climate and transformation fund, with the special fund’s term set at 12 years. The special fund’s additivity will be ensured by first achieving an “adequate investment ratio” in the regular federal budget.