Germany’s new Finance Minister Christian Lindner announced a plan on Friday to invest an extra €60 billion (roughly $68 billion) in climate policies.
The financing comes from left-over, unused debt borrowed by the government in 2021 and it is expected to be passed as part of a supplementary budget on Monday.
“I have handed the draft supplementary budget to the Cabinet today,” Lindner said in his first major appearance as finance minister.
The lawmaker from the liberal pro-business Free Democrats Party (FDP) said the investment would be a “boost for the economy.”
‘No further borrowing’
A tweet from the finance ministry said they would “get a second supplementary budget 2021 on track to tackle the effects of the pandemic and also prepare €60 billion for future investments.”
“There will be no further borrowing,” it added.
The German government had already taken out €240 billion in debt to support businesses during the pandemic, but had only used €180 billion.
The conservative Christian Democrats, now in opposition, questioned if such a reallocation was permissible under budgetary law.
Lindner also said that some of the funds would be earmarked for the “digitalization” of the German economy.
FDP comes out swinging
The FDP joined a three-way coalition with the Social Democrats (SPD) and the Greens — the so-called “traffic light” coalition.
The new government was sworn in on Wednesday under new Chancellor Olaf Scholz from the SPD.
Holding the finance ministry was long the ambition of the FDP,especially given that the foreign minister’s post (often held by the FDP in the past) traditionally goes to the second strongest party in a coalition, in this case the Greens. They also managed to get their coalition partners to agree to not increase tax or borrow more money.
This has led some to question where investments for the government’s ambitious climate plans will come from.
New government’s green goals
Under pressure from the FDP, the government promised to return to the so-called debt brake that severely limits borrowing.
“Only by ensuring stable finances can we meet the requirement of fairness between the generations,” Lindner said on Friday.
The coalition has pledged to source at least 80% of the country’s energy from renewable sources by 2030, as well as increasing the number of electric vehicles on the road from 500,000 to 15 million in the same time frame.