It would also be expedient to build up greater
safety margins in the Federal budget below the
budget ceiling defined by the debt brake – not
only to ensure greater operational fexibility to
deal with unexpected developments but also,
for example, to make provision for the demo-
graphic challenges that are gradually emerging.
It would also be better to use the reserves set
up to cover expenses relating to refugee immi-
gration costs in order to pay down public debt
by the end of 2017 at the latest.
By then it
should then be possible to relatively accurately
gauge future expenditures on refugees, and
these should then be financed out of regular
income streams. The current accounting treat-
ment of the reserve in the context of the debt
brake may lead to a confict with EU rules,
which state that changes in reserves – like
financial transactions – should be disregarded
when calculating the fiscal balance.
The under lying rationale of the debt brake is to safeguard
the EU fiscal rules, which is another reason why
surpluses accumulated from previous years
should not be used to plug funding gaps in the
budget plans.
In general, policymakers should
resist the temptation to use windfall budgetary
gains such as reserves to cover new, perman-
ent additional spending in the short term since
this causes a future cumulative consolidation
requirement.
EU Forecast
euf:ba18a:20/nws-01