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German government to borrow less on capital markets in 2017
December 19, 2016 / 7:50 PM / a year ago

German government to borrow less on capital markets in 2017

BERLIN (Reuters) - The German government will borrow less money on capital markets in 2017 than this year, the Finance Ministry’s debt agency said on Monday, taking advantage of its budget surpluses to keep a lid on debt issuance.

German Chancellor and leader of the conservative Christian Democratic Union party CDU Angela Merkel and German Finance Minister Wolfgang Schaeuble (R) attend the CDU party convention in Essen, Germany, December 7, 2016. REUTERS/Kai Pfaffenbach

The government aims to raise 172 billion euros (145 billion pounds) via instruments such as Bunds and Bubills, and a further 6 to 10 billion via inflation-linked securities, the debt agency said.

This year the government has borrowed 202.5 billion euros. The 2017 target amount would be the lowest in many years.

The federal government, which wants to keep a balanced budget over the next four years, will not need to borrow as much next year because it does not have to pay back as much to creditors.

Berlin has been running budget surpluses but prefers to sell new bonds to cover its old debt and use its surpluses to increase its spending on infrastructure. It also builds a financial buffer into its calculations each year. This is why it needs new money even though it plans not to issue new debt on a net basis in 2017.

The debt agency said it planned to issue around 152 billion euros in capital market instruments and around 20 billion euros in money market instruments next year.

Most of the envisaged issuance will consist of Federal Treasury notes (Schaetze), Federal notes (Bobls) and Federal bonds (Bunds), it said.

In the first quarter of 2017, the agency plans to issue around 39 billion euros in capital market instruments and around 4 billion in money market instruments.

Reporting by Michael Nienaber; Editing by Robin Pomeroy and Hugh Lawson

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