BERLIN (Reuters) – The German state plans to reduce the amount of its bond issues next year as Europe’s largest economy seeks to reinstate a debt brake that had been suspended to cope with the COVID-19 pandemic and the energy crisis.
Germany plans to issue federal securities for a total volume of 440 billion euros in 2024, according to the issuance program of the German Financial Agency published on Tuesday.
This amount is around 60 billion euros lower than that planned for this year for which a record level of issuance of around 500 billion euros has already been reached.
The new issue will be used to fill the deficit planned in the budget of Finance Minister Christian Lindner. Some 343 billion euros will be dedicated to repayments by amortization of the current debts of the federal state and its special funds.
After weeks of negotiations, the tripartite coalition in power in Germany reached an agreement last week on its federal budget for 2024, which will restore the country’s debt brake, a measure enshrined in the Constitution which limits it to 0.35 % of gross domestic product (GDP) the annual budget deficit.
Of the 440 billion euros to be raised in 2024, the German state plans to issue 247.5 billion euros through auctions of conventional federal securities on the capital market and 165 billion euros on the money market, said the German Financial Agency.
She adds that 17 to 19 billion euros will be raised through green federal securities, which will be used to finance environmentally and climate-friendly spending.
Germany’s sovereign rating by major rating agencies is “AAA”, indicating an extremely low risk of default.
(Reporting Rene Wagner, written by Miranda Murray, French version Claude Chendjou, editing by Kate Entringer)
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