The International Monetary Fund (IMF) criticized the planned fuel subsidy in Germany. Alfred Kammer, the IMF’s Director for Europe, stated to the “Handelsblatt” that such measures are problematic because they distort price signals and undermine incentives for energy conservation. He also argued that they lack focus, pointing out that general tax cuts disproportionately benefit high-income households, which tend to consume more energy, calling the situation neither efficient nor fair.
Conversely, the IMF expert welcomed the easing of the debt brake in Germany and the creation of a special fund valued at 500 billion euros. Kammer noted that these funds would be well-used if they are genuinely directed towards infrastructure, thereby increasing growth potential. However, he cautioned the federal government against using the billions for other purposes, warning that diverting these funds to consumption-oriented spending would be highly problematic.
Furthermore, the head of the IMF’s Europe department cautioned that additional investments alone are insufficient. According to Kammer, structural reforms are necessary, as otherwise the potential for growth remains too low. He specified that Germany needs to reduce bureaucracy, speed up planning and permitting processes, and increase efficiency within the healthcare sector. He also stressed the importance of increasing the labor supply, suggesting that factors such as improving childcare and abolishing the spouse tax split could boost female labor participation.
