German government revises draft budget and financial plan
The German government has approved a new budget for the current year. According to the document, the state debt will amount to 81.5 billion euros. In addition, the authorities approved a draft financial plan, which will operate until 2025. The latter notes that the amount of attracted credit facilities will increase by more than 60 billion euros.
According to the German Finance Minister, the country’s economy is still in a rather fragile position that requires significant support. Therefore, we have to increase borrowing in order to stabilize the market and cover the damage caused by the pandemic. Part of the loan money will go to compensate for the costs associated with the reduction of tax benefits, which was in effect during the pandemic.
At the same time, German authorities noted that the economy was showing positive dynamics. The country is still an important player on the world stage, which is confirmed by international rating companies, for example, the agency S&P Global Rating analyzed the long-term credit ratings of the state and left them at the highest level of confidence – “AAA”. Moreover, this status is fair for loans in both local and foreign currencies. The short-term rating also remained at a high level – “A-1+”.
Such confidence from international organizations confirms that Germany is one of the most creditworthy countries in the world. This high rating was not affected by the increase in public debt and the deficit that Germany faced in 2020. Despite the difficulties, the economy continues to recover and strengthen.In 2020, the country’s GDP fell by 4.9%, but in 2021 it grew by 3.2%. According to S&P analysts’ forecasts, in the current period the figure should increase by 3.7%. The period of 2023-2024 assumes a slowdown to about 1.8%.
In general, experts of the international agency say about high institutional efficiency of the processes in the state, and good reserves help the German economy to recover.
As the latest data shows, Germany managed to stabilize a number of processes, among them is the unemployment rate. It has remained unchanged at 6% for several months and is forecasted to remain so for quite a while. There are currently about 2.8 million unemployed in Germany, and so far this figure is not going to grow.
The government actively supports small and medium-sized businesses, introduces special benefits and subsidies to support people who are temporarily left without permanent income. In addition, after the pandemic there has been a strong recovery in manufacturing industries, which also contributes to employment and replenishment of local budgets.