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Substantial German budget surplus

January 13, 2016

The German Finance Ministry has reported a 2015 budget surplus that's twice as high as originally envisaged. It said the good news was attributable most of all to record-high tax revenues and one-off effects.

Piggy bank with euro banknotes
Image: picture-alliance/dpa

Germany logged a budget surplus of 12.1 billion euros ($13.1 billion) in 2015, the finance ministry announced Wednesday. In a recent forecast, the ministry had penciled in only 6.1 billion euros.

Officials said the unexpected scope of the surplus could be explained by strong tax revenues that turned out to be a lot higher than expected as unemployment in the country remained at record-low levels.

German Finance Minister Wolfgang Schäuble said he planned to use the 2015 surplus to fund costs associated with the ongoing influx of refugees.

External factors pivotal

Germany balanced its budget for the first time in over four decades in 2014. Apart from tax revenue, 2015 saw large sums of money being washed into state coffers through the auctioning of mobile communications licenses.

In addition - and perhaps being the biggest factor behind the surplus last year - record-low interest rates meant that Germany's debt repayment burden was much lower than it would have been in times of normalized central bank policies.

Wolfgang Schäuble said he was planning to come up with a balanced budget in 2016 too, based on the assumption that the domestic labor market remained robust.

The Federation of German Industries (BDI) said Wednesday in Berlin that it expected GDP growth to reach just under 2 percent this year against the backdrop of low oil prices and a weaker euro against the dollar, making German exports cheaper.

BDI President Ulrich Grillo warned, however, the government must invest more to improve the country's delapitated infrastructure, suggesting Berlin's preoccupation with the refugee crisis has distracted it from other fundamental needs like repairing crumbling roads, rails and waterways.

hg/cjc (Reuters, dpa)

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