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Germany eyes record debt issuance in 2021 despite slightly lower borrowing at year-end

By Reuters

BERLIN – Germany plans to issue 4 billion euros less debt in the fourth quarter than previously planned as fewer companies than expected tapped the government’s economic stabilisation fund (WSF) during the pandemic, the Federal Finance Agency said on Tuesday.

Despite the slightly reduced borrowing needs at the end of the year, overall 2021 debt issuance will reach a record high of some 482 billion euros, the agency said.

Europe’s largest economy will issue a total of 104 billion euros in debt in the October-December period excluding inflation-linked debt, the agency said.

The finance agency will raise 47 billion euros on capital markets (1 billion less than initially planned) and 57 billion euros on money markets (down 3 billion euros from the previous sum).

Finance Minister Olaf Scholz has asked parliament to suspend the debt brake in the constitution for the second year in a row, allowing net new debt of up to 240 billion euros in 2021 to finance emergency measures in the COVID-19 pandemic.

On top of this comes the refinancing of maturing debt: In the summer quarter alone, more than 100 billion euros of old debt had to be repaid and rolled over into new debt.