BERLIN, Nov. 13 (Xinhua) -- The Federal Audit Office in Germany issued a damning verdict on the latest public spending plans of the country's ruling coalition government on Tuesday.
Speaking to press in Berlin, Federal Audit Office President Kay Scheller drew attention to what he described as growing risks to German household finances in the recently-finalized federal budget for 2019. "The federal budget is coming under greater and greater pressure," he warned.
Scheller criticized the pursuit of an "expansive fiscal policy" by the Chancellor Angela Merkel's (CDU) cabinet without any simultaneous "consolidation" measures which would deprive the budget of "breathing space." By basing financial planning decisions on currently favorable framework conditions, such as a low interest rate environment, the government was relying on a "false security" which could evaporate quickly again as economic conditions changed.
Amongst others, Scheller drew attention to looming fiscal challenges stemming from a rapidly ageing German society and the need to invest more funds in the maintenance and modernization of public infrastructure. If the government expenditure was too high in the short-run, legislators were likely to lack the flexibility to react to these issues without assuming new public debt.
The current coalition government formed by the Christian Democratic Union (CDU), Christian Social Union (CSU) and German Social Democrats (SPD) has recently announced that it plans to ramp up public spending on defense, foreign developmental aid and social policy in the coming year. Total annual expenditure is consequently forecast to rise by around 13 billion euros (14.6 billion U.S. dollars) to 356.4 billion euros in 2019.
Although the government has vowed to adhere to the long-standing "black zero" dogma in German fiscal policy of acquiring no additional debt on a net basis, the Federal Audit Office lamented on Tuesday that the latest budget represented a missed opportunity to subject the situation of public finances to critical scrutiny while domestic economic growth was strong.
Aside from failing to target fiscal consolidation in the 2019 spending plan, the Federal Audit Office also drew attention to underlying structural weaknesses which were seen to undermine the health of government finances. For example, fiscal authorities had failed to charge many Germans who were found to have illicitly evaded taxes by transferring their money abroad.
The Federal Audit Office is primarily tasked with reporting, auditing and counseling duties as an external financial controller in public affairs in Germany. Although the Bonn-based agency can only provide non-binding recommendations, it is not subordinate to the federal government and its activities and regular reports are formally enshrined in the German constitution.
