The Federal Court of Auditors has sharply criticized the draft of the 2023 federal budget by Christian Lindner (FDP). “The true state of federal finances is not clear from the draft budget,” says a report that was sent to the members of the budget committee on Thursday and is available to WELT. The shifting of expenses and debt into special funds and accounting practices distorted the picture.
The “genuine net borrowing”, as the experts at the Federal Court of Auditors call it, is “four times higher than that shown in the federal budget at around 78 billion euros”, where there are only 17.2 billion euros.
Ultimately, Finance Minister Lindner is accused of window dressing when he says that the debt brake will be activated again in 2023. The report by the Court of Auditors states: “The debt rule is adhered to on paper and thus suggests a financial policy aimed at limiting new borrowing. However, due to the fact that net new borrowing is significantly higher, its effectiveness is severely limited.”
The highest federal authority based in Bonn is asking the Ministry of Finance to give MPs “better and clearer information on the true state of federal finances”. In particular, the “genuine net borrowing” must be clearly visible in the federal budget.
The “considerable open and hidden indebtedness of the federal government” must be ended. “The draft federal budget for 2023 and the federal government’s financial planning up to 2026 do not immediately reveal the actual state of federal finances,” they write.
The higher credit requirement reported by the Court of Auditors is calculated by adding the amounts that accrue from the release of the general reserve and in various special funds in 2023.
Accordingly, the 40.5 billion euros that are to be withdrawn from the former asylum reserve next year must first be procured again by credit for budgetary reasons. “Due to the accounting practice, however, this process is not reflected in the federal budget,” write the experts.
The situation is similar with the “Climate and Transformation Fund” (KTF), as well as the special funds “Digital Infrastructure”, “Building Aid 2021” and “Bundeswehr”. According to the draft budget, the KTF is to take out loans of 9.3 billion euros next year, 2.7 billion euros are expected in the digital infrastructure special fund, and credit-financed expenditure of 3.2 billion euros will be incurred for the 2021 development aid. These amounts are also “removed from the statement in the federal budget” due to a change in accounting practice in the previous year, writes the Federal Court of Auditors.
Then there is the 100 billion euro pot for better equipment for the Bundeswehr. These funds are not yet available. They are constitutionally exempt from the debt rule. Debt remains. In the coming year, loans of 8.5 billion euros are to be taken out for this purpose.
These accounting practices are all based on laws passed by Parliament. However, the Federal Court of Auditors is bothered by the lack of transparency. Budget clarity and truth are neither ends in themselves nor do they have a purely formal function. It cannot be communicated if the Federal Ministry of Finance withholds the degree of transparency that would be possible from the budget legislator, i.e. the members of the Bundestag.
In doing so, they also refer to the fact that expenditure will by no means fall in the coming years, but will remain “strongly expansive, including the special funds”. For example, from the point of view of the Federal Court of Auditors, they will actually be 504.6 billion euros in 2026 instead of 436.3 billion euros, as shown in the federal budget. In the coming year it will be 492.6 billion euros instead of 445.2 billion euros.
The Federal Ministry of Finance rejects the allegations in its statement contained in the report. The budget draft lacks “neither transparency nor is parliamentary control restricted”. The detailed business plans of the special funds are attached to the draft budget.
From the Court of Auditors’ point of view, however, it is not enough to list key information individually in the most diverse places in the draft federal budget. “The correct picture of the true state of public finances must not be left to the analysis of specialists in budget law and budget systems,” the auditors respond to the ministry’s statement.
The experts from the Court of Auditors also criticize the increasing imbalance in the financial resources of the federal and state governments. The report states: “In the tax distribution, the federal government will lose around 100 billion euros from 2022 to 2026 through waivers in favor of the federal states.” While the federal government still received 41.2 percent of the total tax revenue in 2019, this share will increase to 39 .3 percent level off.
In addition to its continuous waiver of income in favor of the federal states, the federal government also finances tasks from its budget that are essentially the responsibility of the federal states and municipalities, the auditors write. As examples they cite the financing of schools and universities, accommodation and heating costs, urban development funding, digital infrastructure and municipal investments. Federal Minister of Finance Lindner also criticizes this imbalance.
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