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Investing.com -- The old Bundestag, Germany’s federal parliament, is set to vote on Tuesday on constitutional amendments to increase debt. This comes after the Federal Constitutional Court rejected urgent motions by the AfD and the Left Party on Friday, which were aimed at preventing the reconvening of the old parliament.
Katharina Dröge and Britta Haßelmann, in a digital special meeting of the Green Party parliamentary group, announced an agreement on a financial package with the CDU/CSU and SPD. The details of the agreement were reported by Handelsblatt.
The agreement includes a €500 billion special fund, which will be used solely to finance additional investments. These investments are geared towards infrastructure development and achieving climate neutrality by 2045. It is important to note that this fund will be exclusively for the federal government. The states, however, will receive €100 billion from this pot.
An additional €100 billion from the special fund will be allocated to the Climate and Transformation Fund (KTF). The federal budget will also be required to achieve an overall investment ratio of ten percent.
The agreement maintains the exemption from the debt brake for defense spending. This means that the exemption will apply to expenditures that exceed one percent of the gross domestic product (GDP). The scope of application for these loans will be expanded to include civil protection, intelligence services, aid for states attacked in violation of international law, such as Ukraine, and the protection of information security.
For the states, the debt brake will remain in place. They will be allowed to take on 0.35 percent of their GDP in new debt annually. This is a shift from the current requirement for states to maintain a balanced budget.
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