Germany to cut public debt as finances remain in black

(FRANKFURT) - The German government said Wednesday it will bring down overall public debt in the coming years as robust economic growth and record employment enables it to keep its finances in the black.

The German finance ministry announced that Europe's biggest economy aims to cut overall debt to 61.5 percent of economic output by 2019 from 74.7 percent last year.

Under EU rules, member states are not allowed to run up total debt in excess of 60 percent of gross domestic product (GDP).

But Germany's debt ratio has long exceeded that ceiling, reaching a record 80.3 percent in 2010.

Under the ministry's latest updated stability programme, the debt ratio will gradually be reduced to 71.5 percent this year, 68.75 percent in 2016, 66.0 percent in 2017, 63.75 percent in 2018 and finally 61.5 percent in 2019.

At the same time, the public budget will show a surplus of around 0.25 percent of GDP this year, compared with 0.6 percent in 2014.

Germany aims to balance its budget in 2016 and once again run up modest surpluses of around 0.25 percent in 2017 and 2018 and then 0.5 percent in 2019, according to the stability programme, which EU member countries must present each year to Brussels.

"The German economy is robust, growth is above trend and employment will this year reach a new record with more than 42.8 million people in work," the ministry said.

"With its solid budget policies, the government is making a substantial contribution to reaching the EU's budget goals," the ministry said.

Germany, the economic powerhouse of Europe, has fared much better than its neighbours during the long economic and financial crisis, thanks to far-reaching structural reforms it undertook a few years ago.