Germany's Debt Reform: A Modernization for Long-term Investment

German political parties are negotiating changes to the country's debt regulations to boost long-term investment. A special fund and an expert commission will provide immediate stimulus and develop modernization proposals for the debt brake limiting government borrowing to 0.35% of GDP, with legislation aimed for completion by 2025.

In a bid to foster long-term investment, German parties engaged in governmental negotiations are seeking to modernize the nation's debt regulations. The aim is to facilitate more substantial investment practices, supported by a special fund designed to deliver immediate financial stimulation, according to a document acquired by Reuters.

The conservative CDU/CSU and Social Democrats have reached a consensus on establishing a commission of experts tasked with generating proposals for updating the debt brake. This regulation currently caps government borrowing at 0.35% of the gross domestic product, as indicated in the document.

The proposals crafted by the expert commission are intended to serve as the foundation for legislation that is scheduled to be finalized by the end of 2025. This legislative endeavor seeks to modernize fiscal policies and enhance economic growth prospects.

(With inputs from agencies.)