Berlin agrees on plan to reduce 2025 budget deficit, spokesman says

(Reuters) – German coalition leaders have agreed on a plan to cut a 17 billion euro ($20.3 billion) deficit projected in next year’s budget, government spokesman Steffen Hebestreit said on Friday.

The German government adopted its 2025 budget plan in July after months of discussions, but has yet to find solutions to reduce the deficit.

Finance Minister Christian Lindner had said the government was looking for ways to reduce it to 9 billion euros.

Among the options being considered: using additional funds from the state-owned KfW bank and converting subsidies to the national rail operator Deutsche Bahn and the motorway company into loans.

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The Finance Ministry’s advisory board described these options as problematic, which is why negotiations are continuing.

The state will provide 4.5 billion euros in equity to Deutsche Bahn’s infrastructure division, replacing the subsidies that were included in the previous version of the budget.

Deutsche Bahn will also receive a €3 billion loan from the government, which can be used to repay bonds previously issued on the market.

These measures are not included in the regulations that limit public borrowing to 0.35% of gross domestic product.

The government will also receive an additional 300 million euros from the electricity company Uniper, which finally has more funds set aside to repay the federal aid received in 2022.

(Reporting Maria Martinez, Christian Kraemer and Holger Hansen, French version Leo Marchandon, editing by Kate Entringer)