Faced with calls to boost growth, Germany ups investment
Wolfgang Schaeuble - Photo EU Council
(BERLIN) - Germany said Tuesday it would sweeten a 10-billion-euro public investment plan with another five billion euros amid calls by partners to do more for the eurozone economy.
After reporting its first balanced budget since 1969 last year, the finance ministry said in a statement it would earmark an additional five billion euros ($5.6 billion) for the next three years to help cash-strapped towns and cities.
The agreement between Finance Minister Wolfgang Schaeuble and Vice Chancellor and Economy Minister Sigmar Gabriel as well as other cabinet members and leading members of parliament will not send Germany into the red, the ministry insisted.
"There was agreement among all those involved that the goal set down in the (government's) coalition pact of a balanced federal budget with no new borrowing may not be challenged," it said.
Germany has prescribed strict austerity measures for the eurozone's debt-mired members and Chancellor Angela Merkel frequently says that Berlin aims to lead by example with budgetary discipline.
But European allies and the United States have repeatedly urged Germany, an export powerhouse, to boost demand.
The cash windfall will go to regions that have failed to benefit from the relative strength of the German economy, the eurozone's biggest.
The extra investment, to be funded with rising tax receipts, will go to the cabinet for approval on March 18.
Schaeuble had announced the original 10-billion-euro public investment package to 2018 in November, calling it a "fundamental contribution" to a plan announced by European Commission president Jean-Claude Juncker for an extra 300 billion euros in investment for the coming years.
His ministry on Tuesday offered a breakdown of where that money would go including seven billion euros between 2016 and 2018 for improving public transportation infrastructure, boosting energy efficiency, expanding broadband networks, combatting climate change and promoting urban renewal.
The remaining three billion euros will be pumped into other "future-oriented projects", it said.
Calls for Berlin to do more to support growth have grown louder as eurozone growth continues to lag and due to concern in Germany about dilapidated infrastructure and waning competitiveness.
The government is also confident that the injection of additional public funds will, in turn, generate more private investment.