German Finance Minister Christian Lindner has laid out a plan for the country to increase defence funding in coming years and continuously meet the NATO alliance's spending targets in an interview with dpa.
Lindner said money from a €100 billion ($107 billion) special defence fund created in 2022 in the wake of Russia's full-scale invasion of Ukraine would help boost spending in the coming years.
The NATO alliance has called on all member countries to spend at least 2% of gross domestic product (GDP) each year on defence.
The German special fund is expected to last until 2027.
Lindner denied media reports that Germany might fall short of the target next year, and reiterated that Germany would meet the 2% spending target "in all coming years."
He said ministry officials and budget specialists at the Finance Ministry had seen no evidence to suggest otherwise.
After 2028, Lindner told dpa that Germany could shift future debt repayment plans in order to add up to €9 billion ($9.7 billion) in annual defence spending to the budget.
Lindner told dpa in an interview that fiscal discipline by the German government should bring total outstanding public debt below 60% of gross domestic product (GDP), a ratio recommended by the European Union in the Maastricht Treaty.
That would allow the government to pump more money into defence spending instead of using it to pay off about €300 billion in debt borrowed between 2020 and 2023 to respond to the coronavirus pandemic as well as the fallout from Russia's invasion of Ukraine and the resulting energy crisis.
Repayment of those bonds is scheduled to begin in 2028 and run for more than 30 years, with repayments of €9 billion per year planned from 2028, according to Lindner.
"However, if the burden of the pandemic on the debt level has already been overcome by then, the repayment could be significantly reduced," he said.
That would allow Germany to fund a jump in annual defence spending to match the NATO 2% target even after the special defence fund is exhausted, Lindner said.
Shortfalls might remain, however. According to sources close to the Finance Ministry, an additional €25 billion would have to be raised to meet the NATO spending targets - and a gap would remain even if the government completely waived repayment of the coronavirus debt.
Lindner was nevertheless optimistic: "If we manage to strengthen economic growth in the years up to 2028, and if we do without additional costly social spending, then we will manage to meet the 2% target," he said.
Russia's invasion of Ukraine highlighted what German leaders have acknowledged are major shortcomings in the country's military capabilities.
Defence Minister Boris Pistorius has said that the government is now working to make the military, known as the Bundeswehr, "fit for war."
Lindner, a leader of the liberal-conservative Free Democrats (FDP), argued that the prospect of future financial leeway should provide his left-leaning coalition partners - the Greens and the Social Democrats (SPD) - with an incentive for fiscal discipline.
Lindner has repeatedly criticized his coalition partners, including Chancellor Olaf Scholz of the SPD, over their interest in additional debt-financed spending - despite coalition agreements to avoid excess borrowing.
"This permanent disagreement is damaging to the external image of the coalition," Lindner said. "My advice would be to simply accept the status quo until parliamentary elections. Then the citizens can decide whether there should be more government, more debt and higher taxes or a leaner state with lower interest burdens and lower taxes."