Germany Closes Budget Gap with Creative Financial Maneuvers

Germany's coalition government has agreed on strategies to reduce a 17 billion euro budget gap, emphasizing innovative financial solutions like equity injections and loans to Deutsche Bahn. The plan also involves contributions from energy utility Uniper, setting the stage to present a draft to parliament.

Germany's coalition government has reached a landmark agreement to narrow a 17 billion euro ($19 billion) budget deficit, enabling the submission of a draft plan to parliament. Government spokesperson Steffen Hebestreit confirmed the breakthrough on Friday.

Following the July approval of the 2025 budget by the German cabinet, Finance Minister Christian Lindner disclosed efforts to reduce the shortfall to 9 billion euros. Strategies considered included utilizing extra funds from state bank KfW and converting grants for Deutsche Bahn and the highway company into loans.

The Finance Ministry's advisory board highlighted issues with these options, prompting further negotiations. The agreed measures involve providing 4.5 billion euros in equity to Deutsche Bahn's infrastructure division and a 3 billion euro loan to the same company, measures exempt from the debt brake. Additionally, energy utility Uniper will contribute an extra 300 million euros.

(With inputs from agencies.)