Defense News

Germany 

German Finance Minister Christian Lindner has outlined potential plans for increased defense spending in the coming years. Speaking to DPA news agency, Lindner stated that if Germany manages to decrease its debt levels below the EU-mandated threshold of 60% of GDP, up to 9 billion euros could be allocated to defense by 2028.

The additional funds would be made available by reconsidering the repayment of coronavirus-related debts, currently scheduled to begin in 2028. Lindner emphasized that falling below the 60% debt threshold could prompt a reevaluation of these repayment plans.

Germany incurred emergency loans totaling approximately 300 billion euros in response to the COVID-19 pandemic and the conflict in Ukraine. These loans, coupled with the suspension of the debt brake, have strained the country's fiscal position.

Lindner highlighted the potential for financial flexibility without altering the debt brake mechanism. He suggested that reducing the debt burden could create room for increased defense spending.

The government's current budgetary plans include debt repayments of 9 billion euros annually starting in 2028, with a larger sum of 10.8 billion euros per year from 2031. However, Lindner indicated that if pandemic-related debts are sufficiently mitigated, these repayments could be scaled back, freeing up funds for defense.

The goal, according to Lindner, is to align with NATO targets for defense spending, which require member states to allocate at least 2% of GDP to defense. In light of the ongoing conflict in Ukraine, Germany established a special fund of 100 billion euros for modern weapons procurement and pledged to meet NATO's spending target.

Looking ahead to 2028, Lindner warned of impending challenges as the special fund's reserves are depleted. To maintain defense spending at the required level, an additional 20 to 25 billion euros may be necessary in the regular defense budget.

In sum, Lindner emphasized the potential for increased financial flexibility if debt levels are reduced, presenting a pathway for bolstering defense spending in the future. This strategy builds on previous instances where the government extended debt repayment timelines to create additional fiscal space.