Germany backs 40 bn euro supplementary budget to fund Ukraine costs

Germany's parliamentary budget committee approved plans on Friday to take out almost 40 billion euros ($42.3 billion) in additional debt this year to fund costs stemming from the fallout of the war in Ukraine.

The draft supplementary budget envisages new borrowing will take Germany's net debt in 2022 to 138.94 billion euros with the total government expenditure estimated at 495.8 billion euros, according to the Bundestag budget committee.

Following overnight talks, the committee agreed the package to help finance a second energy relief package for consumers, business aid and higher costs for the integration of refugees from Ukraine.

Germany temporarily suspended constitutional limits on new debt to finance unprecedented fiscal support for the economy during the coronavirus pandemic, borrowing 130 billion euros in 2020 and a record 215 billion euros last year.

From 2023, Germany's ruling coalition of Scholz's Social Democrats (SPD), the Free Democrats (FDP) and Greens aims to return to the debt brake rule of the constitution that limits new borrowing to a tiny fraction of economic output.

In addition to the supplementary budget, Germany has plans for 100 billion euros in credit authorisations for a special fund for the military.

($1 = 0.9455 euros)