“Germany the agent of change – who would have thought?” – Christine Lagarde said on Saturday during the annual meeting of the World Bank Group and the IMF in Washington.
Fiscal policy “will play a more supportive role in the coming years,” said the head of the ECB, quoted by Bloomberg.
“This is, of course, particularly true for countries that intend to increase their defense investments, and this is certainly the case – and to a large extent – in Germany, where large military and infrastructure investments are underway, which are only just starting to bear fruit, but which will be implemented in a very significant way over the next three years.” The head of the ECB added that Germany is taking advantage of its lending opportunities.
The new German Chancellor, Friedrich Merz, pushed through a groundbreaking spending bill before taking office, unlocking the potential to transform the German military and modernize its infrastructure, writes Bloomberg.
This is about an agreement to increase Germany's debt in order to allocate additional funds for defense purposes. The agreement assumes the exclusion of expenses exceeding 1%. GDP for defense and security from the so-called debt brake.
The heads of the IMF and ECB are delighted with Germany. “Bravo, bravo, bravo”
Appearing on the same panel as the head of the ECB, the managing director of the International Monetary Fund, Kristalina Georgieva, also praised Europe's largest economy. “My message is: bravo, bravo, bravo,” she said, as quoted by Bloomberg. “Germany shows that imbalances can be resolved, it's a matter of will – above all, political will.”
Earlier this week, Merz called for the creation of a pan-European stock exchange as part of a broader program to help companies deal with competition from the United States and Asia.
“When I hear the German Chancellor say: 'We need one single stock market, one single supervision in Europe,' that means a lot to me,” Lagarde said. “But how it will materialize, how it will happen, how it will work out, I don't know.”
Source: Bloomberg
