A global debt crisis threatens the corona pandemic. States also borrow money abroad to mitigate the consequences. But those who borrow money make themselves dependent. Liabilities are not always only claimed in the form of interest. The relationship between the United States and China is so complicated because the People’s Republic has long been the largest creditor of the United States. In June 2019, Japan took over this title with just under $ 1.122 trillion. Japan and China ($ 1.112 trillion) accounted for almost a third of the total US external debt ($ 6.636 trillion). The third-placed United Kingdom only got $ 341 billion.
Almost five trillion euros in foreign debt
Germany is not quite as dependent on individual creditors. But the list is also manageable here. In 2019, around two thirds of Germany’s gross external debt was concentrated in ten countries. This is clear from the annual statistics of the Deutsche Bundesbank. The top two came together for a quarter of all German debt securities held abroad. Their total volume was € 4.974 trillion in 2019. That was 107 million euros more than in the previous year.
In relation to gross domestic product (GDP), however, external debt declined. It fell from 146 to 145 percent of GDP. The peak since the turn of the millennium had been reached in 2012 at 166 percent of GDP. German foreign debt has increased almost continuously since 1990. In the year of reunification, they were around two trillion euros and about 93 percent of GDP.
Germany borrows money abroad
Foreign debt is not to be confused with German government debt (which amounted to 2.05 trillion euros in 2019). Foreign debt comprises the financial liabilities of residents towards foreigners with fixed interest and / or repayment dates. “These include, for example, bonds, loans and deposits. Financial claims without repayment obligation, such as shares, direct investments and real estate, are left out, however, ”the Bundesbank defines the term. “The focus on foreign debt with fixed payment obligations allows a look at possible liquidity or solvency risks in a country.”
German economic debt is made up of five economic sectors:
- Monetary financial institutions (MFIs without the Bundesbank)
- Financial corporations without MFIs
- Non-financial corporations, households and non-profit organizations
Foreign debt is valued at the market prices and exchange rates on the respective reporting date. This is December 31 at the Bundesbank.
These are Germany’s largest creditors abroad.
# 10 Belgium
In 2019, Belgium accounted for two percent of Germany’s foreign debt. The country came in tenth place among the largest creditors abroad with 111 billion euros, according to the Deutsche Bundesbank. In 2018, the debt in Belgium had totaled 122 billion euros.
# 9 Italy
Italy was the ninth largest creditor in Germany worldwide in 2019. The foreign debt of the state, Bundesbank, financial institutions, corporations and private households amounted to 134 billion euros (2018: 128 billion euros). This corresponded to three percent of the total foreign debt.
# 8 Japan
Japan was the U.S.’s largest creditor in 2019. In Germany, the Asian economy is only eighth. According to the Bundesbank, 173 percent corresponded to three percent of foreign debt. The total rose slightly from EUR 159 billion in the previous year.
# 7 Ireland
Little Ireland is one of the largest creditors in Germany. And the liabilities have increased significantly. They increased from 183 to 212 billion euros within one year as of December 31, 2019. That corresponded to four percent of German foreign debt.
# 6 Switzerland
The state, financial institutions and households were indebted to Swiss creditors in 2019 with EUR 210 billion. This means that four percent of the total gross debt was due to this country in other EU countries. Gross foreign debt remained at the 2018 level (EUR 211 billion).
# 5 France
By contrast, German foreign debt in France fell comparatively sharply. According to the Bundesbank, they fell from 281 to 321 billion euros (six percent).
# 4 USA
On the list of the largest creditors in the United States, Germany ranks among also ran. The Federal Republic came in 20th place in December 2019 with just $ 78.3 billion, behind Norway and ahead of Bermuda. Conversely, the United States is one of the largest creditors in Germany. The United States accounted for 354 billion euros, or seven percent, of foreign debt at the end of 2019. As in 2018, they took fourth place.
# 3 United Kingdom
The United Kingdom lends Germany much more money than the United States. It ranks third in both country statistics. At the end of 2019, US debtors had only raised $ 332 billion from British creditors. The value for Germany, however, was 519 billion euros. That was ten percent of the total foreign debt of the Federal Republic. However, the United Kingdom lost a place. In 2018, German liabilities still totaled 556 billion euros. In addition to the new runner-up, Great Britain provided the only change in the top 10 largest German creditors abroad.
# 2 Luxembourg
Luxembourg has replaced the United Kingdom as Germany’s second largest creditor abroad. The Grand Duchy rose by one place thanks to 582 billion euros (twelve percent). In 2018, German foreign debt in Luxembourg was still at 547 billion euros. The Federal Republic accounts for the majority of its debts in Europe. The 28 EU member states at that time accounted for 71 percent or 3.533 trillion euros of German foreign debt at the end of 2019. The statisticians were able to save currency conversion on 55 percent of the liabilities. 2.749 trillion euros remained in the euro area in 2019.
# 1 Netherlands
The Netherlands is by far the largest creditor of the Federal Republic abroad. German debt rose from 654 to 666 billion euros at the end of 2019. According to the Bundesbank, this corresponded to 13 percent of the total foreign debt. Our neighbors Denmark (113 billion euros) and Austria (99 billion euros) came in eleventh and twelfth.
A comparison with the foreign creditors of the United States shows that many of the top donors are the same. This applied to Japan, the United Kingdom, Ireland, Luxembourg, Switzerland and Belgium at the end of 2019. However, four of the largest creditors in the United States were missing from the top 10 in Germany. These were Hong Kong, the Cayman Islands, Brazil and above all China.