(MENAFN) The German Stability Council, responsible for coordinating financial matters between the federal government and the states, has projected a decline in the general government budget deficit for the current year, expecting it to reach 1.75 percent of the gross domestic product (GDP) before decreasing to approximately one percent next year. Additionally, the Council anticipates that the structural deficit, adjusted to account for seasonal and non-recurring factors, will amount to about 1.25 percent of GDP in 2024, decreasing further to around 0.75 percent in 2025, with a subsequent slight increase in the following years. By the end of the forecast period in 2028, the deficit is expected to stabilize at approximately one percent of GDP.
While the Council considers these deficit projections reasonable, it underscores the urgent need for fiscal policies to be tightened to achieve them. This call for fiscal discipline comes amidst efforts to address economic challenges and maintain financial stability. German Finance Minister Christian Lindner emphasized the importance of moderate monetary policy tightening during a press conference following the Council meeting. He noted that such measures not only serve to mitigate inflationary pressures but also create a sustainable framework for investment, promoting long-term economic stability and growth.
The projections provided by the Stability Council offer insights into Germany's fiscal trajectory, highlighting both short-term and long-term fiscal goals. Achieving these targets will likely require a concerted effort from policymakers to implement prudent fiscal measures and ensure responsible budget management. As Germany navigates through economic uncertainties and strives to uphold its financial resilience, the Council's recommendations serve as a roadmap for fiscal policy decisions aimed at sustaining economic health and fostering future prosperity.
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