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MNI INTERVIEW: Germany to Reduce Virus Debt Over 20 Years

By Luke Heighton
     FRANKFURT(MNI) - Germany will take many years to return its public debt to
pre-pandemic levels, a senior government official told MNI, although he expected
the country's economy to bounce back from the effects of coronavirus in the
second half of 2020.
     "I do believe that we will see a recovery in the third quarter, and even
more in the fourth quarter," Philipp Steinberg, Director General Economic Policy
at the Federal Ministry for the Economy and Energy, said in an interview. "But
of course any further development depends on the development of the number of
     Germany is prepared to increase its debt-to-GDP ratio to 75% from its
current level just below 60% as it responds to the virus, Steinberg said, noting
that this demonstrated fiscal and political flexibility.
     "We will need to reduce the debt incurred" he continued, "but it can be
done with a very long perspective - the Treasury has foreseen a 20-year period
to write it off (sic)."
     "Because we were pursuing a very sustainable policy strategy, now we can
act forcefully in the political area and on the markets," Steinberg said.
     "There was never an ideology in Germany that we would never do deficit
spending or incur debt if necessary. The crisis proves that we are very flexible
indeed if the need arises."
--MNI London Bureau; +44 203 865 3829; email:
[TOPICS: M$E$$$,M$G$$$,M$X$$$,MC$$$$,MT$$$$,MX$$$$,MFG$$$]

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