How investors pay the German government to borrow


The German government earned 4.25 billion euros between January and August issuing new bonds, as negative interest rates continue to drive down the cost of debt service.

A Secretary of State at the Ministry of Finance, Sarah Ryglewski, told Fabio De Masi, a member of the Die Linke party, that the government had issued bonds worth more than 275 billion euros in the first eight month of 2021 to finance the federal budget and special funds, receiving a premium of € 4.25 billion.

The extra billions were raised because, as a result of negative rates, investors lend the federal government more money than they receive in return. Germany enjoys an AAA credit rating from major agencies, which means that its bonds are considered a safe haven.

Due to the high cost of financing the Covid-19 crisis, the German government will borrow up to 240 billion euros this year, in addition to the 130 billion euros borrowed last year. This was only possible after the suspension of the constitutional debt limits.

De Masi told Reuters that the negative rates meant there was no need to return to debt limits from 2023. “he said.

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