German Government Halts Creation of Economic Stabilization Fund, According to Sources

In a recent hearing in Germany’s lower house of parliament, Bundestag, Chancellor Olaf Scholz and Finance Minister Christian Lindner discussed the government’s response to a recent constitutional court ruling that prohibited the transfer of 60 billion euros in unused funds from the pandemic to green projects. According to a source close to the finance ministry, the German government has suspended spending from the country’s economic stabilisation fund for this year after the ruling.

The government led by Chancellor Scholz is working to develop a comprehensive response to the court ruling. Finance ministry state secretary Werner Gatzer stated in a letter to other ministries that according to the current legal situation, economic stabilisation fund (ESF) funds cannot be utilized this year. To prevent adding further burden to the budget, all unspent spending plans for 2023 are immediately blocked and require the approval of the finance ministry.

The budget committee was previously able to grant approval, but now any unspent funds for this year require finance ministry consent. However, payments connected to the energy price brake for 2023 are not affected by the suspension of ESF spending. The stabilisation fund was initially intended to support companies during the coronavirus pandemic, but has since transitioned its focus to the energy crisis. The ESF move was first reported by Handelsblatt business daily. The government’s response is ongoing as they navigate this legal challenge.