German Finance Ministry's Advisory Board Flags Budget Shortfall Solutions as Problematic

The advisory board to the German Finance Ministry has expressed concerns over three solutions proposed to address a 17 billion euro budget shortfall. In a letter seen by Reuters, the board argues these options may jeopardize the constitutional debt brake. The government is considering alternatives involving state bank KfW, Deutsche Bahn, and the highway company.

The advisory board to the German Finance Ministry sees the three options under consideration to reduce a 17 billion euro ($18.34 billion) budget shortfall as problematic, according to a letter seen by Reuters on Thursday.

The German cabinet passed its 2025 budget in July after months of political wrangling. German Finance Minister Christian Lindner told a news conference that the government was looking at innovative ways to reduce the shortfall.

The options under scrutiny are using extra funds from state bank KfW, as well as converting the grants of Germany's national rail operator Deutsche Bahn and the country's highway company into loans. The advisory board to the ministry expressed doubts about these options, arguing that they could put at risk the constitutionally enshrined debt brake. ($1 = 0.9270 euros)

(With inputs from agencies.)