To whom Germany owes money is a question that one or the other German citizen has asked himself at some point. In fact, the issue is complex. A country can borrow both domestically and abroad.
At home and abroad: to whom Germany owes money
Germany has government or public debts to various creditors. The federal government, federal states, and individual municipalities have outstanding loans. According to that Taxpayers Association The federal government accounts for 67% of public debt, followed by federal states with 27% and municipalities with 6%.
- A state needs money to maintain public life and take care of its citizens. A state often spends more money than it takes in taxes, fees and social security contributions. This leads to a minus in the treasury.
- In order to be able to continue to fulfill all tasks, for example to be able to pay salaries to state employees, there is the possibility of borrowing money from creditors. These creditors can be domestic or foreign.
- Of the Taxpayers Association reports that the Bundesbank estimates that about 35% of federal debt is held by domestic creditors. About 60% of the debt is owed to foreign creditors.
- Domestically, Germany has debts to banks, central banks, investment funds, insurance companies and private investors.
- In addition, national banks and funds invest part of their clients’ money in government bonds. As a result, government bonds are often included in life and pension policies, home savings contracts and investment trusts. Therefore, all investors who invest in such products lend money to the state.
Debts to other countries: Germany borrows money from its neighbors
When it comes to external debt, Germany also has several ways to get money or a loan. Therefore, there are also many creditors abroad to whom the Federal Republic owes money.
- First of all, Germany owes money to other countries. According to capital.de Germany had the most debts to Luxembourg and the Netherlands in 2019.
- Other creditors of Germany are foreign banks and other monetary financial institutions. The Federal Republic also owes money to financial companies without monetary financial institutions.
- Additionally, Germany receives loans from non-financial corporations, private households, and private non-profit organizations.
- Borrowers not only have to pay it back with interest, but sometimes become dependent on it. This dependency relationship is especially true between states when one owes the other a large sum of money. Liabilities are not always claimed in the form of interest.
- Die national debt of Germany has been steadily increasing for decades. In 2000 the amount of debt was 1.211 billion euros, in 2010 it was already 2.012 billion euros and in 2021 it was 2.320 billion euros.
