The economic situation today is excellent, very much in contrast to 1982, when the present coalition took over the government. Prospects for the 1990s are encouraging. The old federal states are experiencing an economic boom. The forces of growth have been strengthened, the willingness of businesses to invest is very high, and expectations for the future are favorable. Our currency is stable and recognized around the world; wages and pensions have increased considerably in the past few years. The reduction of unemployment in the territory of the former Federal Republic is particularly pleasing – coupled with employment growth whose likes we have not seen since the time of reconstruction in the 1950s.
Ladies and gentlemen, the unusually strong economic development in the territory of the former Federal Republic is also largely the result of the process of transitioning to a market economy in the new federal states. The demands of consumers and companies in the territory of the former GDR are still largely oriented toward Western consumer goods, machinery, and facilities. This translates into full order books for companies in the old federal states and unexpectedly high tax revenues for finance ministers and city treasurers. Therefore, solidarity dictates that these funds be channeled back into the new federal states, through private investments, and especially that the new federal states and municipalities be better funded. This is an important contribution to the fulfillment of our great common mission to achieve the inner unity of our fatherland in the economic, social, and environmental sectors as well.
Ladies and gentlemen, we have no historical models to follow in carrying out this task. Never before has an attempt been made to transform a socialist command economy into a Social Market Economy. It is fiscal policy that is particularly challenged in this situation. On the one hand, the reliability and predictability of our fiscal policy must be guaranteed. That is the best way to promote investment and thus build the best foundation for additional new and secure jobs.
On the other hand, our scarce public funds must be increasingly channeled to those places where the need is most urgent and where they will have the greatest impact. The federal government’s benchmark resolution of mid-November 1990 is consistent with this course. The resolution is completed by the coalition agreement. The temporarily high demand for credit by public budgets must be scaled down quickly and noticeably. And under no circumstances can we endanger the trust of capital markets in a stable Deutschmark.
Ladies and gentlemen, as in 1982, we will succeed in reducing the rate of debt increases as quickly as possible. As we announced in November, we will already reduce the burden on the federal budget by 35 billion DM this year. The federal government’s new net credit will be limited to a maximum of 70 billion DM. However, the federal states and municipalities must also make an appreciable contribution to limiting debt levels. Additionally, new burdens are arising as a result of recent changes in world affairs. These changes impart greater responsibilities on us Germans, too. Our partners and allies cannot bear the burden of defending justice and freedom in the Persian Gulf alone. They can continue to count on our support. Even after the end of military confrontation, the states of the Gulf region that are most affected by the conflict will depend on comprehensive foreign aid. The Federal Republic of Germany is also called upon in this regard.
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