refugee crisis

A Fiscal Tug-of-War

Migrants queue to enter a tent_jan 2016_berlin_REUTERS
Germany is struggling to accommodate its influx of refugees.
  • Why it matters

    Why it matters

    The German states claim they will face fiscal problems if Berlin doesn’t pitch in more aid for refugees.

  • Facts


    • States saw a total surplus of €2.8 billion in 2015. They were expecting a deficit of €6.8 billion.
    • The states will receive more than €20 billion from the federal government in 2016; about half goes to refugees.
    • Even with a €2.2-billion surplus, Bavaria could be forced to run deficits or raise taxes to deal with the refugee crisis.
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Germany’s regional governments insist the refugee crisis could wreck their budgets if they don’t receive additional assistance from the government.

Though the states are in their strongest fiscal position since 2007: Germany’s 16 states generated a collective budget surplus of €2.8 billion ($3 billion) in 2015, instead of an anticipated deficit of €6.8 billion, according to a finance ministry report obtained by Handelsblatt, but still warn they need help.

Chancellor Angela Merkel and the leaders of the 16 states agreed on Thursday to develop a joint plan to better facilitate the integration of refugees. There’s disagreement, however, on how to split the bill. The government has allocated €8 billion for 2016, which the states say is not enough.

“The states and municipalities are currently taking on the lion’s share of the public costs, while the federal government makes only a modest contribution,” Torsten Albig, the premier of Schleswig-Holstein, told Handelsblatt.

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