Federal authorities endorse modifications to the Fundamental Statute, affecting the management of public debt and unique assets.
In a significant move, the German federal cabinet, led by Chancellor Olaf Scholz, has requested and successfully obtained the adoption of a constitutional amendment. This amendment, which comes into effect immediately, aims to address several key challenges facing the country.
One of the primary objectives is to significantly strengthen the capabilities of national and alliance defense, a necessity given the dramatic changes in the security situation in Europe, particularly the Russian attack on Ukraine. To finance these efforts, expenditures up to a maximum of one percent of the nominal gross domestic product will be financed by the budget.
The amendments also relax the debt brake, both at the federal level and for the states. This relaxation allows for debts amounting to 0.35 percent of the gross domestic product to be taken on collectively. The future federal government will face the challenge of managing these increased financial obligations.
To address these financing needs, a special fund of 500 billion euros will be established for 12 years. This fund, exclusively for additional investments in infrastructure and achieving climate neutrality by 2045, will provide a significant boost to modernising Germany's infrastructure. This modern infrastructure is crucial, as it significantly influences competitiveness and economic growth.
Expenditures for defense, civil defense, intelligence services, and military aid for attacked states like Ukraine will no longer be counted towards the debt rule of the Basic Law once they reach a certain level. This exemption is designed to ensure the necessary resources are available for these critical areas.
The states and municipalities, too, have large financing needs due to the crises of recent years and the many new challenges. To help alleviate some of these needs, states can invest 100 billion euros from the special fund in their infrastructure. Another 100 billion euros will flow into the Climate and Transformation Fund.
If higher expenditures are required, they could be covered by taking on new debt after the constitutional amendment. This provision allows for flexibility in responding to unforeseen circumstances or increased costs.
The constitutional amendment has been approved by the Bundestag and Bundesrat with the required two-thirds majority, signifying broad support for these initiatives. The law can now be enacted and proclaimed, marking a significant step forward in shaping Germany's future.
An enhanced defense capability requires a well-developed, functional, and modern infrastructure. This amendment is a testament to Germany's commitment to its security and economic growth, as well as its efforts towards climate neutrality by 2045.
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