Overview

• Saxony's Finance Minister Christian Piwarz asserts that new state-level debt should only fund specific infrastructure investments, rejecting broader uses.
• Piwarz highlights the risks of debt-financed policies, cautioning against burdening future generations with unresolved financial issues.
• Germany's new federal financial package allows states to take on limited debt up to 0.35% of GDP, ending the previous zero-debt limit.
• Saxony, known for its strict fiscal discipline since 2006, deviated from this approach during the COVID-19 pandemic to manage the crisis.
• Piwarz calls for structural reforms and economic incentives to address investment needs and the challenges posed by shifting geopolitical conditions.