August 28, 2019 / 11:05 AM / 2 months ago

Finance Minister Scholz appoints critic of Germany's balanced budget policy as new deputy: sources

FILE PHOTO: German Vice Chancellor and Finance Minister Olaf Scholz, a member of the co-governing Social Democrats, looks on during an event in Berlin, Germany, August 17, 2019. REUTERS/Annegret Hilse/File Photo

BERLIN (Reuters) - Finance Minister Olaf Scholz has chosen an outspoken critic of Germany’s balanced budget goal as his new deputy for parliamentary affairs, government sources told Reuters on Wednesday.

The move comes amid growing calls at home and from abroad for Berlin to ditch its prudent fiscal policy and take on new debt to boost fiscal stimulus in Europe’s largest economy, which is teetering on the brink of recession.

Against this backdrop, Scholz has decided to appoint Sarah Ryglewski, 36, a member of the Social Democrats’ left wing, to become his deputy in charge of parliamentary affairs, two people familiar with the matter told Reuters on condition of anonymity.

Ryglewski belongs to a group of lawmakers who in an open letter last month sharply criticized the government’s insistence on the self-imposed balanced budget rule.

Ryglewski and her allies demand a 20-year public investment program that would also see increased spending in state infrastructure during economic downturns.

Under the self-imposed balanced budget rule, known in Germany as the ‘black zero’, more state spending can only be financed through existing tax revenues and a budget surplus.

“The ‘black zero’ and the debt brake should not be an obstacle,” Ryglewski and her co-authors wrote in their open letter, published last month in the SPD party magazine Vorwaerts.

A Finance Ministry spokesman declined to comment.

The leader of Chancellor Angela Merkel’s Christian Democrats (CDU) said on Monday that Germany’s conservatives regard the balanced budget policy as indispensable.

Reporting by Michael Nienaber and Holger Hansen; Editing by Gareth Jones

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