German debt ratio likely to rise slightly in 2024 – finance ministry

The German debt-to-GDP ratio is likely to rise slightly this year but then fall steadily until 2028, the finance ministry said on Wednesday.

The ministry expects the debt-to-GDP ratio at 64% in 2024, according to projections for the EU Commission, which were approved by the cabinet on Wednesday.

In 2023, the debt-to-GDP ratio was at 63.6%.

The ministry said the slight increase from 2023 to 2024 is due to the planned Generational Capital, an additional pension scheme investing in capital markets to ensure pensions remain linked to wage trends.

As a first step, the government wants to take 12.5 billion euros ($13.36 billion) in debt this year for the pension scheme, which are to be invested in capital markets.

From 64% in 2024, the debt-to-GDP ratio is expected to fall to 62% in 2028. Although this figure will be low in comparison with other European countries, it will still be above the 60% of GDP marked by EU fiscal rules.

“Further measures for more growth remain necessary in order to make this path even more ambitious,” said the ministry.

The finance ministry sees the budget deficit for 2024 at 1.75%, down from 2.5% in the previous year.

These numbers are below the 3% limit established by Brussels.

In the years 2025 to 2028 the deficit is expected to be between 1% and 1.5%, according to the ministry.
Source: Reuters (Reporting by Christian Kraemer, writing by Maria Martinez, Editing by William Maclean)