Many provinces are so deeply in debt that they can never pay off the loans on their own. That’s why the federal government and the rich provinces to help. Bavaria’s Minister of Finance Söder wants in return an intra-German Financial Regulator.
Bavarian Finance Minister Markus Söder (CSU) demanded payment in exchange for future intra-German funding the introduction of a Financial for indebted provinces . During the negotiations on the reform of the financial relations between the federal and state it is hard conditions. Excluding a restructuring of the fiscal equalization it would “be no overall agreement,” Söder told the news agency dpa
The countries concerned must submit a binding debt repayment plans . “It is very important that the Stability get sharp teeth. Introducing us that not only funds will be distributed as in the European fiscal pact., It must be monitored and their use, as does the EU Troika on the European level.”
The Stability Council is a body of federal and state governments, which was established with the federalism reform. The central task of the Stability Council is to regularly monitor the budgets of the federal and state governments. Impending budgetary crises should be detected early in order to take prompt countermeasures.
In July, at the working level negotiations on the reform of the financial relations between federal and state governments began. End of 2019 the financial equalization and solidarity surcharge run out in its present form. Bayern currently charged with four billion euros half of fiscal equalization, Berlin, with an annual subsidy of three billion the largest recipient. Bremen and Saarland had called in July, continue to use the proceeds from the Solidarity Supplement for the old debts eradication of countries.
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“If some countries think that they can only change the federal-state financial relations and use the federal budget to pay off their old debts, without also reorder the fiscal equalization, then that does not go with Bayern, “Soder said. “In addition, there must be not only a scheme to pay off old debts, but these countries must make clear how they want to reduce their debt burden. We need binding debt repayment plans of the countries.”
the federal government should take the brunt of the expenditure for the German capital, Berlin, called Söder – “because Berlin has many capital-related expenses that would relieve the financial equalization massively..”