By Maria Martinez
BERLIN (Reuters) - German Chancellor Olaf Scholz's three-party coalition has announced an agreement on the key points of the draft budget for 2024 following weeks of negotiations after a court ruling last month threw the government's finances into disarray.
However, many questions remain after they announced the budget deal, suggesting that agreements still need to be negotiated in certain areas.
WILL GERMANY SUSPEND THE DEBT BRAKE?
Germany's coalition government agreed at least initially not to declare an emergency situation for next year, which would suspend self-imposed rules limiting net new borrowing, which restrict the public deficit to 0.35% of GDP.
However, the coalition left the door open to later suspending the constitutionally enshrined debt brake if the situation in Ukraine worsens and Kyiv needs more aid.
Scholz also said the government was analysing a potential suspension of the debt brake, which is allowed to cope with natural disasters or emergency situations, to maintain the special fund for the floods in the Ahr Valley, created in 2021 and with 2.7 billion euros earmarked for 2024.
The chancellor has nonetheless said "we will comply with the debt brake". Finance Minister Christian Lindner, of the fiscally conservative Free Democrats, said there is no intention of suspending the borrowing limits.
WHERE WILL THE SAVINGS BE MADE?
The three-party coalition announced 17 billion euros ($18.57 billion) in savings from the 2024 budget.
The government said 3 billion euros will be cut on "environmentally damaging" subsidies, the labour ministry will face savings of 1.5 billion euros and the Federal Employment Agency will also see its budget cut by 1.5 billion euros.
How the government plans to fill the gap to arrive at the 17 billion euros announced remains unclear.
WHAT ELSE WILL BE CUT FROM THE CLIMATE FUND?
The climate and transformation fund, designed to support companies' transition towards greener practices, will be reduced by 12.7 billion euros in 2024.
Although there seems to be an agreement on how much to cut, the details on what to cut seem less clear.
Cuts will affect the transport and construction ministries, as well as subsidies for the solar manufacturing sectors and for decarbonising German industrial firms. Premiums for the purchase of electric cars ended abruptly on Sunday.
Documents on the budget agreement only show 2.6 billion euros in cuts to certain programs, raising questions about the other 10.1 billions in savings.
According to economy ministry sources, a gap of 6.5 billion euros still needs to be filled to comply with the 12.7 billion agreed.
($1 = 0.9154 euros)