Germany could soon bury its 'black zero' budget rule
BERLIN, Aug 20 (Reuters) - Germany is facing growing calls
at home and from abroad to ditch its self-imposed balanced
budget rule and take on new debt to inject more fiscal stimulus
into Europe's largest economy.
A senior government official told Reuters this month that
the finance ministry is toying with the idea of issuing new debt
in the form of "green bonds" which could help finance a costly
climate protection package.
As the economy teeters on the brink of recession and
borrowing costs hit record lows, Finance Minister Olaf Scholz
has also said that Germany's reduced debt level gives Berlin the
fiscal muscle to counter a possible crisis "with full force",
suggesting room for extra spending of up to 50 billion euros
Below is an overview of events that could soon decide about
the fate of Germany's balanced budget rule, also known as the
Schwarze Null or black zero.
+++ SEPT 2 +++
Leaders of Chancellor Angela Merkel's conservatives and the
co-ruling, centre-left Social Democrats (SPD) meet behind closed
doors to prepare a comprehensive package of climate protection
measures that are likely to burden the federal budget massively.
+++ SEPT 10-13 +++
Lawmakers in the Bundestag lower house of parliament debate
the government's draft federal budget for 2020 and the mid-term
financial planning until 2023. Scholz's opening speech will give
more hints about his commitment to the balanced budget rule.
+++ SEPT 13 +++
Merkel's conservatives and the SPD continue negotiations to
fine-tune climate protection measures. The package is likely to
include a pricing mechanism for carbon emissions and payouts for
low-income families to cushion the effects of the new measures.
+++ SEPT 20 +++
The so-called climate cabinet, including Merkel, Scholz,
Environment Minister Svenja Schulze and Economy Minister Peter
Altmaier, will seal the climate protection package and decide if
the new measures can be financed without new debt.
+++ MID-OCT +++
Should the climate cabinet decide against burying the 'black
zero' budget, Germany's deteriorating growth outlook could still
put the final nail in its coffin in autumn.
The government is expected to update its growth forecasts in
mid-October. In April, it slashed its 2019 estimate to 0.5%
after an expansion of 1.5% in 2018. For 2020, Berlin predicted a
consumption-driven rebound with economic growth of 1.5 percent.
+++ OCT 30 +++
The finance ministry's panel of tax experts publishes its
latest estimates for tax revenues. Weaker growth means weaker
tax revenues which would limit the government's room for extra
spending and a possible fiscal stimulus package.
+++ NOV 14 +++
The Federal Statistics Office releases gross domestic
product figures for the third quarter. This shows if the German
economy has managed to avoid a recession over the summer.
Germany's export-reliant economy shrank by 0.1% on the
quarter from April to June, and another quarter of contraction
would be viewed as a technical recession.
A weak read-out would raise the pressure on the government
to counter the crisis with a debt-financed stimulus package.
On the same day, budget lawmakers in the Bundestag lower
house of parliament put the final touches to the 2020 budget and
the mid-term financial planning until 2023, a marathon meeting
that often drags on until late into the night.
+++ NOV 26-29 +++
Lawmakers in the Bundestag lower house of parliament discuss
and vote on the 2020 budget. They have the final say on the
decision whether Germany should take on new debt.
+++ DEC 6-8 +++
SPD members will vote a new party leadership at a congress
in Berlin. The question of ditching or sticking to the black
zero budget, an invention by Merkel's conservatives, is likely
to play an important role in the race.
Scholz is running on a dual ticket to become co-leader of
Germany's oldest party, and victory would bring him one step
closer to his dream of becoming Germany's next chancellor.
($1 = 0.9029 euros)
(Reporting by Michael Nienaber, editing by Ed Osmond)
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