German states to achieve record budget surplus in 2018: report

Source: Xinhua| 2018-11-16 23:10:03|Editor: Mu Xuequan
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BERLIN, Nov. 16 (Xinhua) -- Germany's 16 federal states are set to achieve another record budget surplus this year, according to report on Friday.

The German newspaper Handelsblatt cited new data from the German ministry of finance, saying that state governments were on track to receive total revenue which was more than 20 billion euros (22.67 billion U.S. dollars) higher than their combined public expenditure in 2018. The surplus has already reached the level of 19.6 billion euros during the first three quarters of the year, marking an increase of 6.9 billion euros compared to the same period in 2017.

"At the end of September, the development of the state budgets is still presenting itself much more favorably than during the previous year", the ministry of finance wrote. The single largest budget surpluses were measured in the state of Bavaria (plus 3.5 billion euros), followed by Lower Saxony (plus 2.8 billion euros), Berlin (plus 2.3 billion euros) and Baden-Wuerttemberg (plus 1.8 billion euros).

Even relatively poor states which were previously seen as sources of concern with regards to their public finances can look forward to a windfall in 2018. Saarland (plus 165.8 million euros), Bremen (plus 430 million euros), Schleswig-Holstein (plus 576.4 million euros) and North Rhine-Westphalia (plus 681 million euros) also recorded significant surpluses and are hence all on track to comply with a new fiscal ceiling which will prohibit regional governments in Germany from assuming any additional net debt as of 2020.

The ministry of finance attributed the development to a significant rising in tax revenue which has been experienced by German fiscal authorities throughout the year.

State income was up by 4.7 percent on average between January and September, while expenditure only rose by 2.3 percent during the same period. Additionally, regional budgets were boosted by a steep 8.6 percent fall in debt-servicing costs as a consequence of the current ultra-low interest rate environment.

Handelsblatt noted on Friday that the latest findings could lead to renewed tensions between Chancellor Angela Merkel's (CDU) federal cabinet in Berlin and the German states as the two levels of government spar over how to divide costs related to the accommodation and processing of refugees.

Regional governors are calling for a significant and permanent reduction of their own expenditure in this context from 2020 onwards, a demand which has so far met with resistance from Finance Minister Olaf Scholz (SPD).