BERLIN, April 16 (Reuters) - The German government should draw up a multi-year plan to radically consolidate its budget, setting clear priorities on social spending, the Bundesrechnungshof federal auditing institute said on Tuesday.
New levies or the reduction of tax concessions should be discussed and the federal government should free itself from co-financing tasks that should be funded by German states, the institute said.
Bundesrechnungshof President Kay Scheller called for a consolidation plan beyond the medium-term financial blueprint to 2028 currently being drafted by the government.
"The federal government needs a medium and long-term perspective of at least five to ten years for the important areas of defence, climate protection and social security," said Scheller.
He rejected Finance Minister Christian Lindner's proposal to further extend the repayment of record debts from the pandemic to create room for manoeuvre for the budget.
"That would prolong the problem of amortisation and push the interest expense further back and increase it," Scheller said.
The Bundesrechnungshof also warned against increasing government debt. By the end of 2023, the government's debt burden is estimated to have risen to over 1,600 billion euros.
"Experience shows that the federal government never repays debts once they have been incurred," the Bundesrechnungshof said. Instead, new debt is taken on to repay loans that are due.
The 2024 budget shows net borrowing of 39 billion euros, which will be needed almost in full to pay the interest expenditure of 37.4 billion euros planned for this year.
($1 = 0.9404 euros) (Reporting by Holger Hansen. Writing by Maria Martinez. Editing by Mark Potter)
