Piwarz: Debt only justifiable for specific investments

Saxon Finance Minister Christian Piwarz (CDU) believes that new debt at state level is only possible in connection with concrete investments in infrastructure. Anything else would not be justifiable, he told the German Press Agency. On the one hand, there is a huge need for investment. On the other hand, there is a risk that additional money will only be used for consumption.

Problems must not be shifted into the future

"This would only shift the problems into the future and create a rather heavy mortgage for future generations," said Piwarz. If we were to embark on the path of new debt, this could only be linked to strict earmarking for investments. Then there would be some kind of benefit for society as a whole. However, without structural changes, new money would only buy time and peace of mind.

After the resolutions passed by the Bundestag and Bundesrat, the federal states will also benefit from the financial package, as they will be able to take on debt amounting to 0.35 percent of gross domestic product in future. Until now, the states have had a debt limit of zero.

Saxony has been considered exemplary in terms of financial policy

According to Piwarz, it is now a question of how this option is structured. Saxony has so far been considered exemplary in terms of financial policy. Since 2006, the Free State had not taken on any new debt, repaid loans and imposed a particularly strict debt brake. It was only the coronavirus pandemic that put paid to this strategy. In 2020, Saxony, like other federal states, took on debt to cope with the consequences of the pandemic.

Minister warns against self-service mentality

In Piwarz's opinion, taking on debt should never lead to a self-service mentality. "Along the lines of: I solve my problems by borrowing money again and again and then seeing when I can pay it back." Saxony has always taken a different approach. "We would do well to stick to this principle even in difficult times." Covering up existing problems with more and more new money is a mistake.

Piwarz calls for investment incentives for the economy

The Finance Minister admitted that two hearts were beating in his chest in the debate about easing the debt brake. On the one hand, he sees the huge need for investment and, on the other, the dangers of a credit-financed policy. Germany must respond to the enormous needs arising from changing geopolitics. At the same time, the country is dependent on the economy picking up again. It is therefore important to create investment incentives.