Country-specific discrepancies in public debt expansion
Governments, regions, municipalities, and social security organizations in Germany collectively owe banks and businesses approximately 2.5 trillion euros. Over a fifth of this debt is owed by the regions. Despite some areas needing to borrow more, other regions have seen a significant decrease in their debt burden.
As per the Federal Statistical Office, Germany's financial obligations increased by 0.6% or 14.7 billion euros by the end of June 2023 compared to the previous year. This totals to 2,459.8 billion euros. However, this is 1.7 billion euros less than in the first quarter. Debts to the private sector, such as banks and corporations, are the only figures included in this figure.
The federal government's debt increased by 0.1% or 979 million euros by the end of 2023. The debt of the "Economic Stabilization Fund Corona" special fund decreased by 11.8% to 32.6 billion euros, while the "Special Fund Bundeswehr" saw an increase of 93.3% to 11.2 billion euros.
By mid-year, the regions had 603.7 billion euros in debt, an increase of 1.6% or 9.5 billion euros compared to the end of 2023. The highest increases were seen in Berlin (8.6%), Mecklenburg-Vorpommern (7.7%), Rhineland-Palatinate (7.3%), and Hesse (7.1%). The largest decreases were reported by Bavaria (minus 7.2%), Hamburg (minus 2.5%), Bremen (minus 2.3%), and Thuringia (minus 2.2%).
Municipalities and municipal associations also saw an increase in their debt, which rose by 2.7% to 158.8 billion euros. The largest increases were seen in Mecklenburg-Vorpommern (10.2%), Saxony (8%), and North Rhine-Westphalia (5%). A decrease in debt was only recorded in Rhineland-Palatinate (minus 11.3%), and Thuringia (minus 2.7%).
The debt of the social security institutions decreased by 0.8% to 40.6 billion euros, as reported by the statistics office.
Over 1 trillion euros in reserves
Only a few days ago, experts also reported that the federal government, regions, municipalities, and social security institutions, as well as municipal associations, also have a substantial financial surplus. This amounted to 1,143.6 billion euros at the end of 2023, an increase of 5.3 billion euros compared to the previous year. Only the financial surplus to the private sector is included in this figure.
The federal government's financial surplus decreased by 1.2% to 447.5 billion euros. This is primarily due to the portfolio reduction at FMS Wertmanagement GmbH, created in 2010 as a liquidation institution for Hypo Real Estate Holding, which struggled during the financial crisis.
The financial surplus of the regions decreased by 3.8% to 269 billion euros. The highest increases were recorded in Brandenburg (17.4%), Hesse (15.1%), and Baden-Württemberg (11.7%). The largest decreases were seen in Lower Saxony (minus 26.7%), Schleswig-Holstein (minus 26.3%), and Mecklenburg-Vorpommern (minus 25.1%).
Municipalities increased their financial surplus by 4.8% to 246.3 billion euros, while the social security institutions had an increase of 5.8% to 180.8 billion euros.
The Commission, as part of the analysis, noted that despite an overall increase in financial obligations for Germany by 0.6% in the first half of 2023, the debt of social security institutions decreased by 0.8%.
Consequently, The Commission suggested that the effective management strategies implemented by social security institutions could serve as a model for other entities like the Federal Government and regional bodies to reduce their debts.
