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Germany wants to reduce use of special funds - German Finance Minister

Plenum session of the lower house of parliament, Bundestag, in Berlin

BERLIN (Reuters) - German Finance Minister Christian Lindner said on Thursday that he wants to reduce the use of off-the-budget special funds, after criticism by a government unit which monitors spending that the use of such funds concealed real debt levels.

The Bundesrechnungshof, a federal entity auditing federal financial management, criticised the draft budget presented by Lindner this week.

There are 29 special funds at the federal level, including a 100 billion euro ($107.07 billion) fund for Germany's Armed Forces and the 200 billion euro Economic Stabilisation fund set up in response to the energy crisis related to the Ukraine war.

"I would like to reduce the number of special funds," Lindner said at an event for international journalist. He noted that the Economic and Stabilisation Fund will end next year.

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He added that his goal is that by the end of the legislative period in 2025, there will be less special funds that at the start.

"The special funds should not be demonized per se," Lindner said, adding that they have an important function, supporting the economy in critical moments, being independent from annual financial planning.

He explained that in the case of the Climate and Transformation Fund, tax revenues from CO2 emissions go into the fund instead of into the federal budget, so that these revenues can be invested in climate protection measures.

Lindner also defended the fund for the armed forces as the only way to reach the 2% defence spending target for members of NATO, as a "bridge" until this can be paid from the federal budget.

The fund for the armed forces will be exhausted in 2027 and it is uncertain how the government will then comply with the NATO commitment.

"We must use the time in which we have the special fund to prepare the budget as a whole for this great challenge of 2028," Lindner said.

($1 = 0.9340 euros)

(Reporting by Maria Martinez; Editing by Alexandra Hudson)