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Budget debate in shadow of refugee influx

Sabine Kinkartz / msh
September 8, 2015

Germany's provisional budget for 2016, currently under debate in parliament, is two months old - and already out of date. A further 6 billion euros are needed to help incoming refugees, and the figure could well rise.

Deutschland Bundestag Haushalt Bundesfinanzminister Wolfgang Schäuble
Image: picture-alliance/dpa/M. Kappeler

Budgetary debates in the German parliament - or Bundestag - tend to be strikingly sober affairs; figures play a major role, emotions take a back seat. This time things are rather different. Even at the first sitting following parliament's summer break, Speaker Norbert Lammert wasted no time in skipping the standard pleasantries.

"We are seeing despairing people in their flight to and across Europe, and we're seeing shocking, almost unbearable pictures of those who have paid for this with their lives, many of them children," Lammert said, introducing a topic that has seemed rather more pressing in recent weeks than how much the German government plans to spend on what next year.

And yet the two issues clearly have a close relationship to each other. Both will occupy Germany's political class for months or years to come.

"Mixed in with our sympathy and sadness are justified concerns about how we will deal locally with the continuing influx, and how we will maintain control of our country, its borders and its rule of law," Lammert said, as the Bundestag discussed how Germany and Europe should respond to the humanitarian situation.

Will 10 billion euros be enough?

What's clear is that Germany's plans to take in 800,000 refugees this year, to care for and to integrate them, will cost a lot of money. The federal government has set aside 6 billion euros ($6.7 billion) to this end. Still, Finance Minister Wolfgang Schäuble does not want to rack up fresh debts.

Deutschland Flüchtlinge in München
Schäuble says recent efforts to balance the books mean that it is now easier for Germany to react to the migrantsImage: Reuters/M. Rehle

For Schäuble, the first speaker after Lammert in the debate, dealing with the refugee crisis is an "absolute priority." The challenge had presented itself, Schäuble said, and must now be met.

"We can master this challenge," Schäuble told parliament. "We are in a position to react, because we have earned ourselves some financial leeway in recent years."

Other desired areas for spending would have to take a back seat, Schäuble said. Speaker Lammert shared this outlook.

"We can, and we must argue in this debate about the necessary and possible measures, about the legal and financial backdrop, about high-priority and less pressing tasks," Lammert said. He added, however, that caring for refugees should not be seen as a cost issue alone.

A government plan on dealing with the refugee influx is expected by September 24; Schäuble is hoping to cover any extra costs with the surplus currently predicted as the result of stable economic growth and high income tax revenues, but he acknowledged there was currently "no point" in speculating on a final figure.

Supplement to the budget a certainty

Finance Minister Schäuble's draft budget for 2016 foresaw 312 billion euros in government spending, an increase of 3.4 percent on 2015's projected spending. The 2016 estimate will now rise to 318 billion.

So far this year, outgoings have been covered by buoyant revenues, not least by 290 billion euros in tax revenues.

Public investments make up 30.9 billion euros of projected 2016 outgoings, an increase of around 1 billion compared to 2015. This money is set aside for repairs to streets, sidewalks, bridges and other public infrastructure, as well as the expansion of the country's digital infrastructure.

Deutschland Haushaltsdebatte Merkel mit Schäuble
Chancellor Merkel has already hinted at the prospect of ballooning costs connected to the new arrivalsImage: picture-alliance/dpa/M. Kappeler

It's considered probable that Schäuble will take the expected government surplus of 2015 and put it into a special fund for the 2016 budget. In theory, this should ensure that the finance minister keeps to his pledge for the government's annual budgets to stay in the black. He rejects taking on any new sovereign debt.

This could come undone, however, if the number of refugees keeps on rising and if the money set aside doesn't cover the costs. German Chancellor Angela Merkel has said she considers it entirely possible that paying for accommodation, care, language classes, integration assistance and so forth could cost up to 10 billion euros.

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