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<p>Rising interest rates will impact municipal budgets in Germany by increasing the cost of loans and making it more difficult to finance necessary investments in infrastructure and transformation. While most municipalities should have sufficient leeway to deal with higher interest rates, highly indebted municipalities may be strongly affected by rising interest rates. In these municipalities, interest costs are increasing strongly, budgetary margins are narrower anyway, and these municipalities are more dependent on loans to finance their investments. Rising interest rates thus once again reveal the unresolved and fundamental challenges for the municipal financial system in Germany.</p>
</abstract>

Rising interest rates will impact municipal budgets in Germany by increasing the cost of loans and making it more difficult to finance necessary investments in infrastructure and transformation. While most municipalities should have sufficient leeway to deal with higher interest rates, highly indebted municipalities may be strongly affected by rising interest rates. In these municipalities, interest costs are increasing strongly, budgetary margins are narrower anyway, and these municipalities are more dependent on loans to finance their investments. Rising interest rates thus once again reveal the unresolved and fundamental challenges for the municipal financial system in Germany.

Kommunalfinanzen in Zeiten steigender Zinsen

Wirtschaftsdienst

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Kommunalfinanzen in Zeiten steigender Zinsen"}

Rising interest rates will impact municipal budgets in Germany by increasing the cost of loans and making it more difficult to finance necessary investments in...

Kommunalfinanzen in Zeiten steigender Zinsen

Published Online: Jan 24, 2023

Page range: 55 - 61

DOI: https://doi.org/10.2478/wd-2023-0017

© 2023 Stephan Brand et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.