Debt Relief

Germany Celebrates Lack of Interest

schauble
See? The economy's fine. Wolfgang Schäuble.
  • Why it matters

    Why it matters

    Germany’s sustained period of low interest rates has failed to revive the economy. However, the report suggests that knock-on low interest expenditure means there is more money to invest. Not everyone agrees.

  • Facts

    Facts

    • The report found that the estimated €57 billion ($71 billion) Germany will pay creditors this year is 13 percent less than in 2013.
    • Interest expenditure is likely to fall by another 5 percent in 2015, it says.
    • Some of its assumptions are likely to be criticized.
  • Audio

    Audio

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A report by members of a key German finance committee has found that interest payments on national debt will continue to fall, relieving pressure on public finances.

A working party of the Stability Council, a committee of federal and state-level experts that coordinates budgetary and financial planning among the different layers of German government, said that the estimated €57 billion ($71 billion) Germany will pay creditors this year is 13 percent less than in 2013. The unpublished report obtained by Handelsblatt also predicted that interest expenditures in 2015 will fall another five percent to €54 billion. While expenditures are expected to climb in the medium-term, the rise is likely to be so small that interest expenditures will be below today’s level in 2018. The predictions follow a period of sustained low interest rates.

With Germany currently experiencing lower tax receipts than anticipated, increased investments, wage rises and expensive civil servant pension costs, the report promises some relief for ministries battling with national and international debt regulations.

However, a separate group on the Stability Council, the new independent advisory board, which regularly reports on the condition of public finances, could well cast doubt on the working group’s forecast. The advisory board, led by the economics professor Eckhard Janeba, was formed last year to meet new European Union regulations requiring an independent board to monitor budgetary rules in all member states.

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