Excessive emergency loans, late repayments and fictitious budgets
The Berlin Court of Auditors called on the red-green-red coalition for more transparency in finances and a stricter austerity policy before starting the government. At the same time, the President of the Court of Auditors, Karin Klingen, warned on Monday during the presentation of the 2021 annual report not to abuse the Corona emergency declaration to bypass the debt brake.
As a result of the corona crisis, the debt of the Berlin state budget reached a record high of 63.7 billion euros at the end of 2020. The reason is new pandemic-related loans of 7.3 billion euros, the House of Representatives paved the way for this in 2020 by declaring an extraordinary emergency.
However, according to the Court of Auditors, such high loans were not at all necessary to cope with the pandemic in 2020; according to the auditors, half a billion euros in emergency loans would have been enough. In addition, the Court of Auditors criticized the state for putting 5.4 billion euros in emergency loans in a pandemic reserve for the following years in order to spend the money for other purposes.
“Emergency loans should not be used to fund additional measures that have always been desired, but should be used to tackle the emergency,” said ACA President Klingen.
Over € 4 billion in emergency loans have yet to be spent, a small part has been used to finance university buildings, for example, although they have nothing to do with the corona emergency. . The “lump sum savings” of these emergency loans “violate budget law,” Klingen said.
The debt brake foresees emergencies in which loans and higher debts can be taken, he said. But these funds can only be used to fight the emergency and not for other political objectives.
Still in view of the future red-green-red coalition of old and new partners of the SPD, Greens and Left alliance, the Court of Auditors calls for a clearer austerity policy. The coalition’s goal of presenting a balanced budget by the end of the 2026 legislature is “not ambitious enough.”
This includes the considerations of the future government alliance in the coalition agreement to start repaying emergency loans only at the end of the legislature. The idea of repaying loans only if they are not exhausted is also criticized by the auditors.
So far, plans call for balancing the 2022/23 budget using all reserves, they say. For the next two years, there are funding gaps of 2.7 billion euros each, they say. For a “sustainable and generationally fair financial policy”, Berlin must return to balanced budgets and economically oriented debt reduction.
The Court of Auditors also casts serious doubt on the coalition’s management of the finances of public enterprises. The reason for this is the announcement that the losses of state-owned enterprises will be amortized in the 2022/23 budget by renewed emergency loans, even though billions still remain in the pandemic reserve.
The situation is similar for investments. These must be strengthened, which is also welcomed by the Court of Auditors. But here too, the state wants to make an effort on the part of state-owned enterprises. “We see plans to move investing activities to areas outside of the core budget to be problematic,” Klingen said.
At the same time, Klingen warned of the consequences of this parallel budget practice to cover investments. “If, for example, state-owned enterprises or special funds take out loans for this purpose, it not only increases their level of indebtedness but also the state’s financial risk,” Klingen said.
In addition to the record state debt of 63.7 billion euros, there is the debt of state companies, funds and institutions. These have increased considerably in recent years and amounted to 21.5 billion euros in 2020. Debt per capita has also increased: from around 20,100 euros in 2019 to 22,150 euros last year, i.e. 10,000 euros more per inhabitant than the Länder average.
Avoid getting around the debt brake by outsourcing borrowing to funds, subsidiary budgets and other constructions. For this reason, the Court of Auditors will examine more closely in the future such outsourcing of loans and investments in state enterprises. Due to the particular challenges, the red-green-red coalition must now be specific about funding its plans, as alliance partners “are also setting the course to deal with high debt in the future,” he said. Klingen said. “This will have implications for several generations.”