The Karlsruhe budget ruling has consequences for funding programs of the state development bank KfW. On Wednesday, KfW imposed a temporary freeze on applications and commitments for four programs in the housing and construction sector. With immediate effect, in coordination with the Federal Ministry of Construction, no more applications can be submitted and all existing applications can no longer be accepted, the development bank announced on its homepage.
Promotional loans and investment grants from these programs that have already been promised are not affected by the budget freeze. Specifically, these are the “Age-friendly Reconstruction” program, the municipal funding program “Energetic Urban Renovation”, the promotion of cooperative housing and the BMWSB hardship program for housing companies as a result of increased energy costs.
In addition, other development bank programs could be affected. “We are in discussions with all commissioning departments as to whether the freeze on applications and commitments should also be applied to other programs,” said KfW. As part of its funding, the institute receives funds from various federal ministries, which it uses for investment grants, repayment grants or to reduce interest rates in bank-passed loan programs. The respective ministries are currently checking whether and which budget titles that they use for KfW funding are affected by the spending freeze, the development bank explained.
Last week, the Federal Constitutional Court declared the reallocation of 60 billion euros in the 2021 budget to be null and void. The money was approved as a Corona loan, but was subsequently intended to be used for climate protection and the modernization of the economy. At the same time, the judges decided that the state was not allowed to reserve emergency loans for later years. As a result, billions more are at risk for future projects. Since the exact impact on the regular budget is still unclear, the Ministry of Finance decided to block certain commitments from all ministries in the budget for coming years as a precautionary measure.
