German Finance Minister vows to rebalance public debt
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At the end of 2022, Germany's public debt reached 2.4 trillion euros ($2.6 trillion).
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German Finance Minister Christian Lindner addresses a press conference on July 5, 2023, in Berlin. (AFP)
German Finance Minister Christian Lindner pledged on Sunday to tackle the nation's public debt after it rose to 66-67% of GDP, surpassing the EU's debt-to-GDP reference value of 60%.
"Our debt burden stands at 66-67% of GDP. It stood at 59% before the pandemic … But I promise that my goal is to bring us back to the pre-crisis level of 59-60% while I am still in office," Lindner said.
At the end of 2022, Germany's public debt reached 2.4 trillion euros ($2.6 trillion) and the increase was largely owed to the pandemic costs and the energy crisis.
The Federal Statistical Office (Destatis) said in March that the debt owed by the public budget to the non-public sector increased by 46.1 billion euros, which amounts to a 2% increase compared to 2021.
According to Lindner's estimates from February, the federal government now spends 40 billion euros per year on debt servicing, up from 4 billion in 2021.
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Sanctions that were supposed to be a deadly blow to Russia's economy have turned into a nightmare for Germany, Europe's largest economy.
A week ago, the economy ministry told Reuters that a sustained recovery of the German economy is unlikely to happen in the near future.
"On the domestic front, the expected cautious recovery in private consumption, services and investment is showing the first signs of hope, which are likely to strengthen as the year progresses," said the ministry in its monthly report.
"At the same time, the still weak external demand, the continuing geopolitical uncertainties, the still high rates of price increases and the increasingly noticeable effects of monetary tightening are dampening a stronger economic recovery."
The ministry has released earlier a pessimistic outlook for the economy attributing the slump to surging energy prices and elevated interest rates that have adversely impacted various sectors of industry.
