The Leading Economy of Europe Plans to Increase National Debt 0 11

In 2026, Germany plans to increase its national debt by one fifth. The leading economy of Europe intends to raise borrowing, Bloomberg reports.

Next year, the Federal Republic of Germany plans to increase federal debt to a record 512 billion euros ($601 billion). The reason for this step is said to be the need to finance the restoration of crumbling infrastructure and the modernization of the armed forces. In total, authorities plan to sell bonds worth about 318 billion euros in capital markets through auctions and 176 billion euros in the money market. "Green" bonds worth between 16 and 19 billion euros will also be issued.

Chancellor Friedrich Merz's government is trying to revive the largest economy in Europe, which is struggling to recover from the pandemic. His government has promised to allocate 500 billion euros from the infrastructure fund for the country's development over the next decade. The German government can afford to increase borrowing since the share of national debt in gross domestic product (GDP) is less than 100 percent, the lowest among the G7 countries.

Experts from the International Monetary Fund (IMF) have urged Belgium to reduce its debt burden and stabilize its finances. The country, which holds a large portion of frozen Russian assets, must take measures to stabilize public finances, or it will have to resort to more radical steps. The latest financial plan of Belgium is "insufficient to stop the growth of the deficit and debt," the IMF stated. By 2030, the debt-to-GDP ratio is expected to reach nearly 119 percent.