The Federal Court of Audit (BRH) has criticized the Federal Government concerning its handling of state guarantees for international businesses and loans, warning of growing risks to the federal budget. According to reports from Politico, which references internal documents, the BRH notes that the federal government has increasingly granted loans to other states using political unconditional financial credit (UFK) guarantees, rather than utilizing standard Financial Cooperation (FZ) guarantees. Under political UFK credits, the state assumes full liability, whereas, when the KfW development bank provides FZ guarantees, it covers 20 percent of the default risk.
The court specifically highlighted serious concerns regarding a political UFK amounting to over 500 million euros granted to an unspecified state. This funding was originally intended for infrastructure investments, but the auditors found that only a small portion of the funds was used for its intended purpose. Furthermore, the report states that the Federal Ministry of Finance (BMF) abandoned the requirements for specific use on 70 percent of these funds, disbursing them as general budget aid instead.
The auditors warned that the expenditures for international guarantees now exceed the revenue generated, marking the first time this trend has occurred since 2024. Looking ahead, projections for 2026 show expected spending of around 2.9 billion euros against total revenues of only 800 million euros. This trajectory, the BRH cautioned, could result in multi-billion euro damages to the federal budget.
The total limit for guarantees the federal government can undertake for foreign transactions is 256 billion euros. By the end of 2025, 71 percent of this limit had been utilized, reaching 180.6 billion euros.
