"Bravo, bravo" – Why Germany is suddenly so popular abroad

WELT "Bravo, bravo" – Why Germany is suddenly so popular abroad Karsten Seibel • 5 hours • 5 minutes reading time During the spring meeting of the International Monetary Fund, the world is celebrating the incoming government's lax debt policy. Expectations are high for Germany as an economic engine, from whose investments others expect to profit. But there are some obstacles. Full of praise for Germany's historic debt plans: Kristalina Georgieva, Managing Director of the International Monetary Fund The greatest praise came from the highest levels. "Bravo," shouted Kristalina Georgieva, President of the International Monetary Fund (IMF), from the large stage in the packed atrium of her building. "Bravo!" She said she knew the Germans were very modest, but it had to be said. There was a lot of jubilation, especially in Europe, over the decision to take on more debt for defense and infrastructure, as it was expected that the entire continent's economy would benefit from it. "Germany is very popular right now," Georgieva said. The addressee was Finance Minister Jörg Kukies (SPD), who sat next to her during the panel discussion. The exuberance of the speech may have been unusual, but the content was not. During the IMF Spring Meetings in Washington, Kukies was repeatedly asked about the future government's debt plans – sometimes appreciatively, sometimes incredulously, always positively. Bundesbank President Joachim Nagel also reported in Washington that he had never received so much praise for Germany. The spending plans were perceived abroad as a sign that Germany wanted to assume greater responsibility again. Expectations are enormous. Current Finance Minister Kukies gladly accepted the praise but downplayed the issue of the additional debt packages. Yes, Germany had been cautious about taking on additional debt in good times, he then said. That's why, in bad times, they always had a buffer to significantly increase spending – for example, during the coronavirus pandemic or after Russia's attack on Ukraine. Germany is once again using its flexibility to solve problems, especially in the defense sector, but also for roads, bridges, railways, ports, and healthcare infrastructure. Times are again bad, not least because the Americans are demanding that Europe pay much more attention to its own security in the future. Expectations abroad are high, but so is the potential for disappointment. The actual economic impact remains completely unclear just days before the change of government. The draft bill must be passed by the new cabinet by mid-June. This starts with the federal budget. Preparatory work for the remaining figures for 2025 has been underway in the Ministry of Finance for weeks. Kukies spoke in Washington of a "flying change" he wanted to achieve – from the old government to the new one. The draft bill must be passed by the new cabinet by mid-June so that the Bundestag and Bundesrat can also approve the figures before the summer recess. This does not seem realistic. The future coalition partners of the CDU, CSU, and SPD would have to agree very quickly on how the existing and new funds would be distributed. While the coalition agreement contains many ideas, there was a lack of time and will during the negotiations to clearly define what would be implemented first. The alternative was to formulate that all measures in the coalition agreement were subject to funding. The economic plan for the new "special fund" for infrastructure, for example, must first be drawn up before even a single euro from the €500 billion pot can be allocated, let alone spent. In addition, when it comes to revenue and expenditure, the federal states often have a say. This applies, for example, to the investment booster planned by the CDU/CSU coalition, which would allow companies to directly write off 30 percent of their acquisition costs. This would quickly provide companies with more liquidity, but the federal states, like the federal government, would initially have to make do with lower tax revenues. Even the so-called "Growth Opportunities Act" of the traffic light coalition government was tiny when it left the mediation committee of the Bundestag and Bundesrat at the beginning of 2024. Depending on where the CDU, CSU, and SPD actually set their priorities in the 2025 and then 2026 federal budget, Germany could once again invest far less in future and, above all, sustainable growth of Europe's largest economy than the many laudatory voices abroad hope for.