Wednesday, August 5, 2020

Germany’s debt ratio rises to more than 75 percent

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Government debt

The 2020 stability program shows that the Ministry of Finance expects a debt ratio of 75.25 percent by the end of the year.


(Photo: dpa)

Berlin Because of the aid packages in the corona crisis, Germany’s public debt is increasing significantly. The Treasury expects the debt ratio – the ratio of debt to total economic output – to be 75.25 percent by the end of the year. According to information from the German Press Agency, this emerges from the Stability Program 2020, which the Federal Government will submit to the EU Commission at the end of April.

Finance Minister Olaf Scholz (SPD) had already predicted a value of this magnitude at the beginning of the week. The report is expected to be adopted in the cabinet on April 22.

The Maastricht European treaties actually set a debt ratio of 60 percent as the maximum. Germany had complied with the stability criteria last year for the first time since 2002, the rate had dropped to 59.8 percent.

According to the preliminary forecast, the ministry expects a deficit of 7.25 percent of the gross domestic product this year at the federal, state and local level. The reasons given are the “strongly expansionary fiscal policy to combat the COVID-19 pandemic” and significant losses in growth. The federal government has put together massive aid packages for companies, the self-employed and employees. To do this, she plans with new debts of 156 billion euros. At the same time, investments in infrastructure, for example, should rise to a record level.

More: Merkel warns of patience in the corona crisis – and expresses cautious hope.

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