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Germany Generated Unexpectedly Large Budget Surplus in 2016

Germany’s Finance Minister Wolfgang Schaeuble Delivers Speech On Europe’s Future
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Germany generated another large budget surplus in 2016 despite increased expenditures related to the refugee crisis, government sources told Handelsblatt.

Sources put the large surplus in the billions, though under €10 billion ($10.5 billion). Full figures will be released Thursday. It would be welcome news for Finance Minister Wolfgang Schäuble, who at the start of 2016 was concerned that Germany might not maintain a balanced budget due to spending associated with the refugee crisis.

At the end of 2015, Mr. Schäuble had set aside reserves of €12.8 billion to deal with the refugee crisis, and he expected to spend €6.1 billion of those reserves in 2016. As it turns out, the government did not dip into its reserves at all.

The surplus was largely driven by unexpectedly high government revenue and a drop in interest payments on public debt. Given the country’s strong fiscal situation, Mr. Schäuble has shifted €3.5 billion to an investment fund for Germany’s municipalities.

Under the current budget law, however, the government has to deposit the surplus in the reserve fund for the refugee crisis. There are calls for the cabinet to change the law to use the surplus to service the country’s debt.

“The reserves shouldn’t become too big,” said Eckhardt Rehberg, the budget expert for the center-right Christian Democrats. “We should service our debts if possible.”

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