Germany approves €39.2 billion extra debt to cope with Ukraine war fallout

“We are dealing with two crises,” Finance Minister Christian Lindner said after the government cabinet’s decision on Wednesday. “A pandemic that, economically, we have not overcome yet and a war in Europe.” [Shutterstock/Juergen Nowak]

The government cabinet has agreed on a supplementary budget by taking on €39.2 billion extra debt this year to help soften the economic blow caused by Russian sanctions and the war in Ukraine.

“We are dealing with two crises,” Finance Minister Christian Lindner said after the government cabinet’s decision on Wednesday. “A pandemic that, economically, we have not overcome yet and a war in Europe.”

Lindner explained that the extra money would help fund a range of expenses related to the war and its consequences.

These include military aid to Ukraine, humanitarian and development assistance, and help for third countries affected by food shortages. It will also fund support for German households facing energy price surges, the transition away from Russian gas, and the accommodation of refugees.

While Lindner argued the impact of Russia’s war on Ukraine, hitting an already crisis-ridden economy, left the government no way around taking on extra debt, others were less convinced.

“Finance Minister Lindner cheats and deceives on all levels,” Christian Haase, the CDU’s fiscal policy spokesperson in parliament, told Redaktionsnetzwerk Deutschland. At least €8-10 billion from the supplementary budget have no relation to Ukraine, he alleged.

The new package is the second supplementary budget tabled by the liberal finance minister, who is traditionally known as a proponent of strict fiscal policy.

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