Germany’s development ministry faces nearly €1.3B in cuts

Germany’s development ministry faces nearly €1.3 billion ($1.3 billion) in cuts for 2023 according to a draft budget released by the cabinet this month. The proposal would see the ministry’s budget slashed from €12.35 billion in 2022 to €11.08 billion next year. Though most departments are facing cuts, the development ministry’s is among the most severe as Germany looks to reintroduce its debt brake. Incorporated into the constitution in the wake of the global financial crisis in 2009, the brake limits new debt to 0.35% of the country’s gross domestic product. The government suspended the rule in 2020 to mount a robust response to COVID-19 but is now reinstituting the policy. The budget emerges at a time when, “with domestic challenges we are facing, including gas prices, development is not on the top of the government’s and particularly [Finance Minister Christian] Lindner’s agenda,” Alina Hemm, an expert at SEEK Development, which runs Donor Tracker, told Devex. It is more than a one-year cut. The government has also announced slowly declining ministry budgets through 2026, when the department is set to receive €10.4 billion. “There’s a really severe budget constraint for all ministries and the government, all in all, despite the fact that there are many new demands in the world,” Marc Schattenmann, the director-general responsible for the budget in the development ministry, known as the BMZ, told Devex. “We can still do a lot of important things with this budget despite the proposed cuts.” He said the government appears to be on track to hit its commitment to spend 0.7% of gross national income on official development assistance next year. There is also a slight increase in bilateral development cooperation, from €4.96 billion this year to €5.36 billion in 2023. And Schattenmann pointed out that Germany is also increasing its commitment to the Global Fund to Fight AIDS, Tuberculosis and Malaria. The budget sets aside €415 million for the fund in 2023, in line with the country’s €1.2 billion commitment for the 2023-2025 funding cycle. Germany pledged €1 billion for the 2020-2022 period, though it eventually added €465 million for the fund’s COVID-19 response. “What stands out is definitely the severe cuts in the United Nations and multilateral sections,” Hemm said. Funding for the U.N. and other multilateral organizations is set to be slashed from €1.01 billion in 2022 to €506.66 million in 2023. The World Food Programme is also taking a hit, with donations scheduled to drop from €70 million in 2022 to €28 million in 2023, according to an analysis by SEEK. Schattenmann highlighted a number of factors for the cuts, including funding cycles and concerns about some agencies, such as the U.N. Office for Project Services, which has been dogged by reports of possible financial mismanagement. Cora Lüdemann, another expert at SEEK, said that the funding that is available does not seem to reflect the priorities of the current coalition, which consists of the Social Democrats, the Greens, and the pro-business Free Democratic Party. “While the current coalition has announced plans to increase its focus on gender equality under the umbrella of a new ‘feminist development policy,’ the 2023 budget draft entails funding cuts to various organizations working on gender equality,” including UN Women and the U.N. Population Fund, she told Devex. And for many of the multilateral funds, the government is adhering to funding levels agreed to by the previous government, which was run by the conservative Christian Democrats. Based on the current coalition’s “stated commitment to global development and the multilateral system, we had hoped to see" an increase, she said. There is a particular concern among observers that the cuts will have an outsized effect on the world’s poorest. VENRO, the umbrella organization of development NGOs in Germany, issued a statement in the wake of the budget announcement, warning, “Countries continue to come under pressure from rising food and energy prices. … Germany must make its contribution to a just and peaceful world and significantly expand its financial commitment in the fight against hunger, poverty and disease.” Schattenmann confirmed that Germany was unlikely to fulfill its coalition promise to spend 0.2% of GNI on low- and middle-income countries. But there is money in the budget to address emerging crises and potentially increase assistance to the world’s poorest. The budget has an additional $5 billion pool of money that ministries can draw on, with the approval of the finance ministry, to respond to emergencies. “The cabinet has made clear that it’s mostly the foreign office and BMZ that will be able to get money out of that provision,” Schattenmann said. “This gives us important flexibility to address the most pressing needs.” There is also the possibility that some additional changes could be introduced by the Bundestag — Germany’s parliament. Lawmakers will have opportunities to debate and shape the budget before ultimately approving a final version by the end of the year. “Given the overall budget restraints of the constitution of Germany, you will not see a magical increase,” Schattenmann said. “You have to be realistic.”