German Federal Government to Assist Municipalities in Reducing Debt
Berlin, January 24, 2025 – The German Federal Government has announced a new initiative to support municipalities in reducing their debt burden. The program will provide up to €10 billion in grants and loans over the next five years.
The announcement was made by Finance Minister Christian Lindner, who said that the government was committed to helping municipalities “build a solid financial foundation for the future.”
“Our municipalities are facing significant financial challenges, and we are determined to do our part to help them overcome these,” Lindner said. “This program will provide much-needed assistance to municipalities that are struggling to manage their debt.”
The program will be administered by the German Development Bank (KfW). Municipalities will be eligible for grants and loans if they meet certain criteria, including:
- Having a debt-to-revenue ratio of at least 120%
- Having a population of less than 100,000
- Being located in a region with high unemployment or low economic growth
Municipalities that receive grants will not be required to repay the money. Municipalities that receive loans will be required to repay the money over a period of up to 30 years.
The program is expected to benefit hundreds of municipalities across Germany. The German Association of Municipalities (DStGB) welcomed the announcement, saying that it would provide much-needed relief to municipalities that are struggling to manage their debt.
“This program is a testament to the government’s commitment to supporting municipalities,” said DStGB President Ulrich Maly. “We are confident that it will make a significant difference in the financial health of our municipalities.”
The program is part of the government’s broader efforts to reduce the debt burden of municipalities. In 2022, the government announced a program to forgive €10 billion of municipal debt. The program is expected to be implemented over the next decade.
The government’s efforts to reduce municipal debt are part of its broader efforts to improve the financial health of the country. The government has also taken steps to reduce federal debt and to promote economic growth.
Bund will Kommunen beim Schuldenabbau unterstützen
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