The International Monetary Fund’s annual Article IV consultation with Germany took place from 4 – 15 May 2017. The IMF delegation conducted talks with various federal ministries, the Deutsche Bundesbank, and industry associations in Berlin. The Executive Board’s discussion on 28 June 2017 concluded this year’s Article IV consultation with Germany. The staff report is available on the IMF’s website.
The IMF confirmed that Germany’s prudent fiscal policies have contributed to a further reduction in debt levels, despite the additional costs associated with immigration. The IMF recommended more public and private investment in infrastructure. In this context, the IMF welcomed the creation of the Federal Infrastructure Corporation for Highways, which will ensure a more stable and efficient framework for investment in transport infrastructure.
The IMF considers Germany’s current account surplus to be very high, but acknowledges that a certain surplus is justified given demographic trends. The German government and the IMF agree that the current account balance is affected by factors on which German policy-makers have no influence, such as commodity prices and exchange rates. There is a consensus that the surplus cannot be attributed to German policy measures.
The German government drew the IMF’s attention to future fiscal challenges, especially in connection with its ageing population. It affirmed that it would continue to pursue sound fiscal policies. The IMF expressly welcomed Germany’s intention to secure the long-term sustainability of public finances. Structural reforms and fiscal consolidation play a decisive role in spurring economic growth and enhancing the climate for private investment.
The IMF also welcomed the measures underway to speed up digitalisation and enhance venture capital investment. It called for further reforms in some network industries and professional services.
With reference to the finance sector, this year’s consultation focused on the impact of the sustained low interest rate environment on the banking and insurance industries.
The next Article IV consultation with Germany will take place in 2018.