Germany is considering setting up independent public agencies that could take on...
BERLIN - Germany is considering setting up independent public agencies that could take on new debt to invest in the country’s flagging economy, without falling foul of strict national spending rules, three people familiar with talks about the plan told Reuters.
Europe’s largest economy is teetering on the brink of recession and pent-up demand for public investment from towns and cities across the country is estimated at 138 billion euros by state-owned development bank KfW. “If managed wisely, an independent public investment agency could even make money by taking on new debt,” the official said.
The Finance Ministry spokeswoman pointed to an earlier statement by a deputy finance minister for parliamentary affairs saying Berlin did not think there was a lack of public funds.Under the European Union’s fiscal rules, countries can run a deficit of up to 1% of economic output as long as their debt-to-GDP ratio is significantly below 60% - something that Germany’s Finance Ministry expects to happen this year.
“We should explore all possibilities to finance necessary investments under the debt brake, including setting up independent bodies not accounted for under the debt brake,” he said. “We should be able to resist criticism about using accounting tricks - the task is worth it.”
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