Germany’s debt ratio to see marginal increase in ’24

Germany’s debt-to-GDP ratio is likely to experience a minor uptick this year, reaching 64 per cent in 2024, up from 63.6 per cent in 2023, Germany’s finance ministry announced on Wednesday, according to Reuters.

This increase is attributed to the new Generational Capital pension scheme, which involves taking on €12.5 billion ($13.36 billion) in debt to invest in capital markets, ensuring pensions keep pace with wages.

Despite the rise in 2024, the debt-to-GDP ratio is projected to decrease to 62 per cent by 2028. While this is above the European Union’s fiscal rule of 60 per cent, it remains low compared to other European nations. The ministry emphasised the need for additional growth measures to further this downward trajectory.

Moreover, the budget deficit is expected to fall to 1.75 per cent in 2024, a reduction from the previous year’s 2.5 per cent.

These figures stay comfortably below the EU’s 3 per cent threshold. Looking ahead, the ministry forecasts a deficit ranging between 1 per cent and 1.5 per cent for the years 2025 to 2028, signalling a positive fiscal outlook for Germany.