Germany’s debt set to balloon

19th June 2009, Comments 0 comments

For 2010, the ministry's medium-term financing plan has pencilled in 86 billion euros in new debt, a record compared with the roughly 48 billion euros foreseen for this year.

Frankfurt -- Germany might have to take on 310 billion euros (432 billion dollars) in debt by 2013, according to finance ministry documents cited on the Internet site of the magazine Der Spiegel.

For 2010, the ministry's medium-term financing plan has pencilled in 86 billion euros in new debt, a record compared with the roughly 48 billion euros foreseen for this year.

Another 72 billion euros would be added in 2011, 59 billion euros in 2012 and 45 billion euros in 2013 to reach the total, according to the documents consulted by spiegel.de.

In 2008, the government took on 11.5 billion euros in new debt to balance its budget as it sought to pull the economy out of the worst recession since 1945.

This year, Germany's public deficit will probably reach 4.4 percent of gross domestic product, Finance Minister Peer Steinbrueck told a panel discussion in Berlin on Wednesday.

Under the European Union's Stability and Growth Pact, eurozone governments are supposed to run deficits of no more than 3.0 percent of GDP and to work towards a balance or even a surplus in times of economic growth.

The European Commission, which polices EU countries' deficits, forecasts that 13 out of the 16 euro countries will break the three-percent rule in 2009 and 2010.

German government spending next year is expected to reach a record 328 billion euros owing to economic stimulus packages needed to fight the global economic crisis, Der Spiegel said.

The labour ministry's budget, which covers unemployment payments, is set to become the biggest spending item again at 153 billion euros.

Receipts of 28 billion euros per year are expected as a result of privatisations but according to the report, the government no longer has enough holdings to generate such a sum.

Germany's general elections scheduled in late September are likely to result in a whole new set of figures, Der Speigel added.

AFP/Expatica

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