By Maria Martinez
BERLIN (Reuters) -Germany’s coalition government reached an agreement on Friday to narrow its 17 billion euro ($19 billion) budget gap to 12 billion euros, in a compromise aimed at salvaging the nation’s 2025 spending plan after the original proposals fell apart.
The German cabinet approved its 2025 budget in July after months of wrangling but left open how to reduce the gap between projected spending and revenue.
Under Friday’s deal, the infrastructure division of Deutsche Bahn will be given 4.5 billion euros in equity, which will replace subsidies that were included in the previous version of the draft budget.
In addition, Deutsche Bahn will receive a loan of 3 billion euros from the government, which can be used to redeem infrastructure bonds previously issued on the market.
“Compared to the July decision, we have decided to invest in transport infrastructure with additional capital and loans for Deutsche Bahn and have made further general savings,” German Chancellor Olaf Scholz said on Friday about the agreement.
The draft budget for 2025 includes a total of 15.1 billion euros in investments for rail infrastructure.
The equity injection and the loan do not count towards the debt brake, which limits public borrowing to 0.35% of gross domestic product. Options under scrutiny in July had included converting the grants of Germany’s national rail operator Deutsche Bahn and the highway company into loans.
The government will also get 300 million euros extra from energy utility Uniper, as the company will pay 2.9 billion euros instead of 2.6 billion as it has set aside more funds for the payment obligation to the federal government for aid received in 2022.
Other measures include a 200-million-euro reduction in the provision for the loss of tax revenue from the European Union energy crisis fund.
The government agreement paves the way for a draft plan to be submitted to parliament on Friday.
“The budget legislators can now begin their deliberations on next year’s budget right on time after the parliamentary summer break,” Scholz said.
The Bundestag will begin the debate in the second week of September.
The Budget Committee carries out a final review on Nov. 14, and the budget should pass both houses of parliament before the end of the year.
($1 = 0.9080 euros)