German Court of Auditors Warns Scholz About Huge Budget Problems

Kay Scheller, president of the German Court of Auditors, has issued a stern warning to the German government, demanding an urgent review of the federal budget. In a big interview with the Handelsblatt newspaper, Scheller said the budget problems are enormous: “Tax revenues are no longer growing consistently, expenditures and objectives are inflated, and interest burdens are dismal. Politicians must now realize the gravity of the situation,” Scheller said. In particular, the federal government intends to borrow 81 billion euros this year, well above the statutory maximum limit of 39 billion.

The president of the Court of Auditors has clashed with Finance Minister Christian Lindner, who has proposed to postpone payment of the coronavirus-related debt beyond the 2028 deadline. “This increases costs in terms of interest and will invite the next German governments to further defer reimbursement for the future. The debt will press like a boulder on the public finances and force the government to pay even more interest to creditors,” Scheller emphasized. If such a decision indeed is made, Germany will no longer be able to expect other EU states to comply with the tax rules, “since Germany itself gets around them in a very ‘clever’ way,” Scheller said.