German development budget set to decrease, according to newly published financial plan

At a press conference on March 24, 2021, the German Federal Minister of Finance, Olaf Scholz, presented the budget caps for the 2022 federal budget bill and individual ministerial budgets, as well as the medium-term financial plan for 2023-2025.

Germany’s overall budget will stand at €419.8 billion (US$507.8 billion) in 2022, thus decreasing by 23% compared to 2021. According to the budget caps, the Federal Ministry for Economic Cooperation and Development’s (BMZ’s) budget for 2022 is set to stand at €10.8 billion (US$13.1 billion)—a decrease of 13% compared to 2021 levels (which included €1.6 billion (US$1.9 billion) in additional COVD-19 funds). However, in a press release, Development Minister Gerd Müller has stated that €1.5 billion (US$1.8 billion) in additional COVID-19 related funding will come on top of the 2022 BMZ’s budget, which would, thus, increase to a total of €12.3 billion (US$14.9 billion). This would put the BMZ’s 2022 budget on par with the 2021 budget levels.

In 2023, 2024, and 2025, the BMZ’s budget levels will decrease to €9.3 billion (US$11.3 billion) in 2023 and €9.2 billion (US$11.1 billion) in 2024 and 2025, respectively, according to the medium-term budget planning. Müller criticized the decrease, stating that the benchmark figures must be adjusted to meet the great challenges lying ahead. However, the publication of the budget caps marks only the first step in Germany’s budgetary process, and due to the ongoing COVID-19 crisis, the budget caps are still volatile and are subject to change.

In the press conference, Scholz announced a further debt-financed supplementary budget for 2021 of €60.0 billion (US$72.6 billion), which will raise this year’s net borrowing figure to more than €240.0 billion (US$290.3 billion) due to the COVID-19 crisis. The majority of the supplementary funds are intended to provide additional short-term assistance for companies as well as to further fund the German Health Ministry's vaccine campaign. 

Press release – Federal Ministry of Finance (in German)

Press release – Federal Ministry of Finance (in German)