Public Debt Rises in First Quarter

Public Debt Rises in First Quarter

Preliminary data released Tuesday by the Statistical Federal Office (Destatis) indicates a rise in Germany’s public debt. As of the end of the first quarter of 2025, the aggregate public sector debt stood at €2.5233 trillion, representing a 0.6 percent increase, or €14.3 billion, compared to the year-end figure of 2024.

The aggregate public sector encompasses the budgets of the federal government, states (Länder), municipalities and special purpose associations, along with social security institutions and associated extrabudgetary funds. The non-public sector includes credit institutions and other domestic and foreign entities, such as private companies both domestically and abroad.

Federal government debt increased by a comparatively modest €0.7 billion when compared to the end of 2024. A significant portion of this increase stemmed from the “Special Fund for the Armed Forces” (Bundeswehr), which saw a substantial rise of 12.8 percent, equating to €2.9 billion, bringing the total debt for that fund to €25.9 billion.

State (Länder) debt reached €615.4 billion at the end of the first quarter of 2025 – an increase of €8.6 billion, or 1.4 percent, above the year-end 2024 figure. Notably, Saxony (+16.5 percent), Saxony-Anhalt (+11.2 percent) and Lower Saxony (+6.8 percent) experienced the largest proportional increases in debt. The rise in Saxony is attributed to heightened borrowing requirements and the need to refinance state treasury bills (Landesschatzanweisungen). In Lower Saxony, a temporary rise in debt resulted from accounting adjustments during the first quarter’s year-end closing process and is expected to be reduced through scheduled repayments throughout the year.

Conversely, Rhineland-Palatinate registered the most significant decrease in debt (-2.6 percent), largely due to typical fluctuations in liquidity during the period. Brandenburg and Mecklenburg-Vorpommern also saw proportional decreases of -0.8 percent each.

Municipalities and special-purpose associations also experienced increased debt, rising by €5.0 billion (+3.0 percent) to reach €174.4 billion.

Schleswig-Holstein (+6.0 percent), Bavaria (+5.2 percent) and Lower Saxony (+4.9 percent) saw the most substantial proportional increases in debt within this group. The only region to register a decrease in municipal and special-purpose association debt was Thuringia (-0.1 percent).

Social security debt decreased slightly, falling by €0.5 million (-1.3 percent) to €38.2 million during the first quarter of 2025 compared to the end of 2024.