This year, the German government wants to sell company shareholdings worth up to four billion euros in order to strengthen Deutsche Bahn's equity capital.

"Proceeds from the sale of federal shareholdings (...) are expected to amount to up to four billion euros," according to a paper from the Ministry of Finance for the budget committee's review meeting on January 18, which was made available to Reuters. The 269-page document sent to the Budget Committee on Wednesday by State Secretary of Finance Florian Toncar (FDP) sets out the government's recently agreed plans for savings, additional revenue and reallocations in the 2024 budget.

The document does not specify which company shares the federal government intends to sell and in what amount. The traffic light coalition assumes that shares in the DHL Group - i.e. Deutsche Post - and Deutsche Telekom in particular could be used. The federal government is involved in more than 100 companies.

SALE OF SHARES TO START IN THE FIRST HALF OF 2024

However, the sale of shareholdings is apparently set to start in the first half of the year. This is indicated by the statement that expenditure of four billion euros is initially blocked until an agreement has been reached between the federal government and Deutsche Bahn on the use of the funds: "In addition, the block will be lifted depending on income from the sale of federal shareholdings, but no later than July 15, 2024, provided that at least two billion euros in investment proceeds have been generated."

At the adjustment meeting next week, the budget holders will put the finishing touches to the federal budget for 2024, which is due to be passed by the Bundestag on February 2. After the Federal Constitutional Court cut 60 billion euros from the Climate and Transformation Fund (KTF), the government was forced to rework the budget and supplement it with savings and additional revenue. This also includes cuts to the diesel subsidy for farmers, against which protests are being held by farmers across Germany. Labor Minister Hubertus Heil (SPD) is to spend 700 million euros less than planned on the citizens' income. In 2024, 26.5 billion euros instead of 27.2 billion euros are now budgeted for the monthly subsistence payments.

There is nothing in the bill about the amount of new debt. According to previous announcements, the government intends to adhere to the debt brake. However, it is still unclear whether the debt brake with a volume of almost 2.7 billion euros is to be suspended for the further financing of the Ahr valley flood aid.

FEDERAL GOVERNMENT ESTIMATES SLIGHTLY MORE FAVORABLE INTEREST RATE DEVELOPMENT

The plans for interest expenditure were also adjusted in several places, for example because interest on earlier loans for the WSF energy crisis fund now has to be paid from the federal budget. The WSF was dissolved at the end of 2023 as a result of the ruling by the Federal Constitutional Court. However, this also results in lower interest payments in some cases. For example, the discount on federal bonds and other securities is budgeted at just under 9.2 billion euros, which is almost 1.4 billion euros less than previously planned. This is justified by a "lower estimate of capital market interest rates in 2024 as a result of the fall in interest rates at the end of 2023". The figure for inflation-indexed securities was also reduced, as the inflation rate for 2024 is estimated to be lower than in the previous year.

As announced last year, military aid for Ukraine will be significantly increased. The funds of four billion euros previously earmarked for 2024 for the "upgrading of partner states in the area of security, defence and stabilization" will be almost doubled to 7.48 billion euros. In order to ensure ongoing financing over several years, the commitment authorization for new financial commitments will be increased by two billion euros to six billion euros.

In addition, the bill also includes additional revenue from the increase in the air traffic tax of 375 million euros and the higher increase in CO2 pricing. The government now expects almost 12.3 billion euros to flow into the Climate and Transformation Fund in 2024 from the CO2 levy on fossil fuels for refueling and heating.

(Contributor: Markus Wacket, edited by Christian Götz. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)

- by Holger Hansen