Federal Budget and Public Debt During the COVID-19 Crisis

Uncertainties about macroeconomic and epidemiologic developments are shaping the budget process for 2021 to 2024. To mitigate the economic and social consequences of the COVID-19 crisis, the federal government implemented a number of measures, the cost of which contributed to a record deficit in 2020 and will continue to lead to a sharp increase in the general government debt ratio to up to 85 percent of GDP (2022). In the long term, the high debt burden should be reduced; however, the persistently low level of interest rates favors a reduced pace of fiscal consolidation and also allows partial reliance on "growing out" of debt.