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Pandemic widens hole in German tax revenues as Scholz eyes more debt

FILE PHOTO: German Finance Minister Olaf Scholz attends a session of the German lower house of parliament Bundestag, in Berlin, Germany, September 9, 2020. REUTERS/Hannibal Hanschke

BERLIN (Reuters) - The German federal government expects its tax revenues from 2020 to 2024 to come in 19.1 billion euros lower than previously projected as the coronavirus pandemic continues to erode public finances, the finance ministry said on Thursday.

For all state levels, including state governments as well as municipalities, the hole in tax revenues is seen widening to 29.6 billion euros.

Presenting the tax revenue estimates, Scholz assured voters and investors that the figures wouldn’t change his determination to help Europe’s largest economy recover quickly after suffering its steepest recession on record due to the pandemic.

“The federal government is doing everything possible so that Germany is getting out of the crisis well and with vigour,” Scholz said.

“This requires unprecedented efforts that we can afford,” Scholz said. He added that the pandemic was not over yet, but that there were signs the economy could have the worst behind it.

Scholz told Reuters on Monday that he was working on a budget for next year which would see Berlin taking on considerably more debt. This will require parliament to suspend debt limits in 2021 for the second time in two years.

Reporting by Michael Nienaber, editing by Joseph Nasr and Paul Carrel