Germany: the trick revealed, now 770 billion in “off-balance sheet” funds risk being blown. Rinaldi “Let the EU open its eyes to German tricks.
The ruling of the German Constitutional Court has opened the Pandora's Box of German off-balance sheet debt, yet another cunning move by Berlin to pretend to be the champion of austerity and in reality do what it wants.
As Bloomberg notes , the Constitutional Court canceled the movement of a fund created "off balance sheet", and financed by debt, for 60 billion, but this is only the tip of the iceberg. Over the years, 29 similar funds have been created and which in total would reach 870 billion. Of these, the last 100 billion, created for the financing of Ukraine, are relatively safe, because they have already been examined by the Constitutional Court which collaborated in writing the law, but the other 770 could be cancelled.
The more than 60 pages of arguments of the Court put this money at risk, or rather they put at risk their classification "Extra Budget", the non-accounting in the state deficit, practically a false accounting, but legal, made by Germany: in fact the off-balance sheet classification has allowed these funds to be classified outside the famous "Debt Brake", the rule that prevents the growth of German debt and makes Germany so "Austere" and proud. The debt ceiling limits the growth of debt in future years, as Bloomberg notes in this graph:
If these 770 billion were classified as debt we would have 15% more of GDP in dry deficits and all the criteria would be skipped, even by distributing everything over several years. Germany's great trick would be exposed, perhaps the entire EU would collapse, from a budgetary point of view.
Antonio Maria Rinaldi noticed the issue and branded it with fiery words: "The German Constitutional Court contests and cancels the shift of resources for 60 billion that the Berlin government wanted to divert from anti-Covid measures to those for the climate, a maneuver deemed unconstitutional and in violation of debt limitation laws. And the risk of a domino effect on all other financing promoted by Germany is increasingly concrete, with the prospect of the Court canceling 770 billion contained as off-budget 'special funds'." This was declared by Antonio Maria Rinaldi, MEP of the League and member of the Econ commission. “Finally what we have been supporting for a long time comes out into the open: while the EU sleeps, Berlin has always pursued its own unscrupulous policy in economic matters, in defiance of all the rules, rigor and austerity that are imposed on others. While the others had to tighten their belts, Germany was allowed everything. Now, however, something has gone wrong, and it is not the League or the dangerous sovereignists who say it, but the German Constitutional Court. Someone in Brussels will open their eyes, or continue to pretend nothing happened."
Because, to be clear, if Berlin does the tricks they are not scams, but they are strokes of genius for Brussels. It would be interesting to know what Budget Commissioner Gentiloni thinks about it, and so do all those officials who are very strict with Italy and are always ready to raise their fingers.
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The article Germany: the trick revealed, now 770 billion in "off-balance sheet" funds risk being blown. Rinaldi “Let the EU open its eyes to German tricks. comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/germania-svelato-il-trucco-ora-rischiano-di-saltare-770-miliardi-di-fondi-fuori-bilancio-rinaldi-che-la-ue-apra-gli-occhi-sui-trucchi-tedeschi/ on Fri, 17 Nov 2023 15:30:18 +0000.