February 26, 2020 / 12:25 PM / a month ago

German finance ministry plans softening of constitutional debt brake

BERLIN, Feb 26 (Reuters) - Finance Minister Olaf Scholz plans to modify the debt brake provision in the German constitution so that the federal government can assume some of the obligations of heavily indebted municipalities, Die Zeit newspaper reported.

The debt relief plan, proposed by the finance ministry some months ago, would see the federal government assume some of the debts already built up by the municipalities. Currently, however, the constitution sets strict limits on debt accumulation by the government.

The constitutional amendment will require two thirds majorities in the directly elected lower house of parliament and in the upper house, which represents regional governments. Chancellor Angela Merkel’s ruling conservative-Social Democrat coalition can only deliver this with the support of opposition parties. (Reporting by Thomas Escritt Editing by Scot W. Stevenson)

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