07.01.2022  |   Special Report

Federal government should refrain from adopting a second supplementary budget 2021

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In executing the budget 2021, the federal government has not used the borrowing authorisation of €60 billion approved to cover pandemic related expenditure. The government now intends to allocate these emergency funds to a fund for investments in climate action and transformation. We hold that such a “borrowing authorisation in stock” is not compatible with the wording and purpose of the debt rule.

We criticised the draft of a second supplementary budget 2021 and recommended a renunciation. This would be a clear signal to show that the debt rule is applied consistently especially in difficult economic times.

Above all, we base our criticism on the following arguments:

  • There is no plausible evidence for a close relation between crisis response and additional borrowing.
  • The sole purpose of the initiative is a borrowing authorisation in stock for future non-emergency measures.
  • The creation of reserves covered by borrowing in special funds overrides the debt rule and prejudges future budget deliberations.
  • This infringes the principle of annuality and encroaches on the parliament’s power over the budget.
  • We hold that a parliamentary decision on a second supplementary budget 2021 after completion of FY 2021 is constitutionally questionable.
  • Moreover, there is no need for immediate action at the beginning of 2022. The draft budget 2022, which will probably be adopted by the Federal Cabinet in March 2022, offers enough possibilities to include the financially pertinent priorities announced in the coalition agreement in budgeting.

Background: The government bill for a second supplementary budget 2021 will be the subject of a public hearing of experts in the parliamentary Budget Committee on 10 January 2022 to which the German SAI has been invited as well.