Germany Budget 2012
German economy is in a good condition, presently. It has the lowest rates of unemployment in years and it still has sufficient financial resources for infrastructural development and tax deductions.
Highlights of Germany Budget 2012:
- Net borrowing by the federal government is expected to remain between 26.1-27.2 billion euros which is significantly more than the expected amount of 22 billion euros in 2011. The projected amount for the 2012 fiscal is 1.1 billion euros lesser than what had been planned in a previous draft.
- The maximum limit for federal borrowing is 40.5 billion euros. This money will be employed for public utility projects such as energy conservation and roads.
26.9 billion euros have already been set aside for these purposes.
- Total government expenditure will amount to 306.2 billion euros in 2012, which is equal to the projected expenditure for 2011 fiscal.
- Tax revenue is expected to increase by 2.7 billion euros and touch the 250 billion mark. This would help with the withdrawal of gross bond sales. Germany is the biggest seller of sovereign debt bonds in Europe and in 2012 it is expected to market bonds worth approximately 270 billion euros.
- In 2011 the budget deficit is expected to touch 22 billion euros compared to 48 billion euros, a previously projected figure. This has been possible due to good revenues from various taxes.
- Budget deficit for 2012 fiscal has been pegged at 26.1 billion Euros compared to the earlier forecast of 27.2 billion Euros.
- 5 billion euros as revenues is expected from privatized companies such as Deutsche Post AG and Deutsche Telekom AG.
- 1,300 public service employees will be released bringing the number down to 254,200. Finance ministry, though, will recruit more employees in 2012 in order to perform tasks related to currency stabilization.
- 1 billion euro has earmarked for buying 7.5 percent shares in European Aeronautic Defence & Space Co.
- 1 billion Euros will be spent for repairing Germanyís highways and railway system.
- A special fund of 1 billion euros will be created to assist communities that have been affected after several military bases were closed down.
- Families that take their kids to day care centers or private nannies instead of publicly operated day care organizations would receive a daily subsidy of 100 euros.
- Income tax regulations would be restructured. This way by Germany will be able to provide for tax cuts worth approximately 6 billion by 2013. This will also assist in Angela Merkelís presidential campaign during that year.
- Federal borrowing to be reduced to 50 percent of the present level by 2015.
- Solidarity charge cuts will be introduced as a substitute for deduction in wage taxes.
- Increased tax revenues are being anticipated over the coming 4 years.
- New tax deductions are supposed to be effected in 2013 but Wolfgang Schaeuble, the finance minister, has stated that reductions would not be significant.
- Germany is expected to earn 247.4 billion Euros from taxes in 2012 and this amount will go up to 275.7 billion euros in 2015.
- Net fresh borrowing by the central government should come down to 14.7 billion euros by 2015.
As per the debt brake laws of Germany, this amount should be reduced to 10 billion Euros in 2016. This will comprise 0.35% of the GDP.
- Inflationary problems are expected to increase in the future.
- It is expected that in 2015 the aggregate debt to GDP ratio will be reduced to 75.5%. In 2010 this figure stood at 83.2 percent of the GDP.
- Average wages will increase by approximately 3 percent in 2012, which is 0.5% better than the projections for 2011 fiscal. However, the rate of economic growth is supposed to go down to 1.8 percent from 3.2 percent in the same period.
- The fiscal deficit for 2011 is expected to come down to less than 2 percent of the aggregate economic production.
- 5.1 billion Euros are expected to be generated through privatizations in 2012, an increase of 1.8 billion on previous plans.
- The central government will be spending 306 billion euros in 2012, an increase of 0.07 percent on 2011. This figure will include 40 billion euros for debt servicing. In 2015 this will go up to 315 billion.
- Germany will be looking to save 80 billion euros on the federal budget by 2014.
- Germany expects that in 2011 the budget deficit would amount to 41.5 billion euros, which is approximately 1.5 percent of GDP.
Expectations from Germany Budget 2012:According to experts, the statistics will boost the claims of Chancellor Angela Merkel that Germany is an example of financial correctness in an era when several countries in Europe are facing severe debt crisis.
Economic growth in Germany is losing ground. In such a scenario it will be hard to reduce debts and limit public spending. Eckart Tuchtfield, an economist working with Commerzbank AG in Frankfurt, has said that the major problem for Merkel would be to strike the correct balance between domestic demands and discipline.
At present, several measures like tax cuts are being suggested and it is being assumed that if these areas are not addressed properly there could be serious issues in the future.
The independent panel of economic advisors of Angela Merkel has stated that in 2012 German economy will grow by 0.9 percent. In 2011 it is supposed to grow by 3 percent.
Economic analysts feel that Germany will be able to balance out the national budget by 2016. Tax revenues are on the up, and so are the salaries and performance of German companies.