German Finance Chief Has More Room to Lift Net Debt Next Year

The German finance ministry has projected a slight increase in the debt-to-GDP ratio for 2024, primarily due to the planned Generational Capital pension scheme. This scheme aims to invest in capital markets to ensure pensions remain linked to wage trends. The finance ministry expects the debt-to-GDP ratio to rise to 64% in 2024, up from 63.6% in 2023.

The budget deficit is expected to play a role in the net debt increase in 2024, with the finance ministry projecting a deficit of 1.75% for 2024, down from 2.5% in the previous year. These numbers are below the 3% limit established by Brussels.

The finance ministry's projections for the debt-to-GDP ratio suggest that the net debt increase in 2024 will be manageable. However, the finance ministry's advisory board has expressed doubts about reducing the budget gap, which could potentially impact the net debt increase in 2024.

German Finance Minister Christian Lindner has emphasized the importance of all EU member states complying with fiscal rules to maintain the sustainability of public debt. The finance ministry's projections and the advisory board's concerns highlight the need for careful management of the budget deficit and debt-to-GDP ratio to ensure Germany's fiscal sustainability.