German gov't records highest budget surplus since reunification

Source: Xinhua| 2019-02-22 22:40:22|Editor: Mu Xuequan
Video PlayerClose

BERLIN, Feb. 22 (Xinhua) -- The German government achieved a budget surplus of about 58 billion euros (68.8 billion U.S. dollars) in 2018, the highest since the reunification of East and West Germany, the German federal statistical office (Destatis) announced on Friday.

Income of the German government rose "significantly" by 4.7 percent to more than 1.54 trillion euros in 2018, while expenditures increased slower by 3.2 percent to some 1.48 trillion euros.

"The main driver of the surplus is the increase in employment, which leads to booming tax revenues," commented Oliver Holtemoeller, Vice President of the Halle Institute for Economic Research (IWH).

The largest share of the national budget surplus was recorded with 17.9 billion euros by the national government in Berlin. All 16 federal states of Germany contributed another 11.1 billion euros to the total governmental budget surplus in 2018.

German municipalities also increased their income, resulting in a total surplus of 14.9 billion euros while the German social insurance and welfare system recorded a surplus of 14.9 billion euros, according to the statistical office Destatis.

Particularly strong growth of 5.7 percent was recorded in income and capital tax payments. Social security payments to Germany's social insurance funds also grew "strongly" by 4.3 percent due to the "good employment development" on the German labor market.

Higher profits of the German central bank lead to governmental revenues from interest and "received payouts" growing by 16.1 percent, Destatis added.

While governmental expenditures on investments and employee wages rose by 7.9 percent and 3.9 percent respectively, Germany's interest expenditures fell by 8.5 percent due to the "continued very low level of interest rates and lower debt levels".

"However, the surplus will be shrinking already this year due to expansionary fiscal policy but also because of the expected downturn of the German economy," warned IWH expert Holtemoeller.

Germany's Finance Minister Olaf Scholz announced in early February, that the German government was missing around 25 billion euros for its budget until 2023 because tax revenues are expected to drop by about 5 billion euros per year in the future.

The German economy lost some of its momentum recently. Germany's gross domestic product (GDP) grew by only 1.4 percent in 2018, significantly less than in 2016 and 2017, when the German GDP grew by 2.2 percent. For 2019, the German government is expecting a GDP growth of only 1 percent.