Germany Enacts Provisional Budget for 2025 Before Snap Elections

(Bloomberg) -- Germany’s finance ministry announced plans to implement a provisional budget at the start of 2025. The move comes after the collapse of Olaf Scholz’s three-party coalition and as the country prepares for elections in February.

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Finance Minister Joerg Kukies’s budget department sent a letter to all ministries and government authorities informing them that the ruling minority government will manage Germany’s finances via a provisional budget until the new government can devise its own finance plan, according to senior Finance Ministry officials. The temporary budget will be based on the government’s 2025 draft budget.

Under the spending plan, the government can only disburse funds that are already committed and required by law to keep the country functioning. This includes unemployment and child benefits, student grants and construction projects that are planned or already underway. Parliament can also authorize additional spending in the event of an emergency. Provisional budget management is common after elections to ensure the incoming government has financial room to maneuver.

The preliminary budget became necessary after the three governing parties failed to agree in November on the 2025 budget, prompting Scholz to discharge Free Democrat Christian Lindner from his duties as finance minister. Lawmakers on Monday are set to approve a measure that would dissolve parliament and pave the way for early elections on Feb. 23.

The provisional budget will remain in place during coalition negotiations and until the new government draws up its own budget for 2025. Senior officials in the finance ministry expect that this will take until the second half of next year.

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