The German Federal Minister of Finance, Jörg Kukies, initiated a one-time refund of 8.5 billion euros from the federal debt at the end of last year, according to a response from the Federal Ministry of Finance to a parliamentary inquiry, reported by the German news magazine Der Spiegel.
The funds come from the repayment of Corona and energy aid in the amount of this sum. However, a recent Constitutional Court ruling in November 2023 prohibits the use of these repayments to finance regular government expenditures, as the aid was financed through emergency loans, which were exempt from the debt brake’s provisions.
To avoid constitutional complications, Kukies apparently decided to use the money to pay off emergency loans. His officials created the previously lesser-known accounting entry “non-structural repayments” in the budget.
This action disrupts the government’s planned repayment plan for the emergency loans, which was supposed to start in 2028 at a rate of 9.2 billion euros per year and last for three decades.
The one-time refund reduces the state’s debt-to-GDP ratio by almost 0.2 percentage points, leaving it at nearly 63 percent of the gross domestic product. Additionally, the federal government will save millions of euros in annual interest payments.