Financial Problems in Connection with German Unity : Germany

When the wall dividing Germany was opened in November 1989, the overall public debt stood at DM 925 billion. By the end of the year 1992, the public debt had increased to DM1.331 trillion. This in itself indicates the magnitude of the financial problems relating to reunification.

The requisite investment in German unity is high. In 1995 public spending and social insurance expenditure for the new states exceeded DM 140 billion after deduction of the latter’s structural and administrative revenue. By the end of 1996, gross financial transfers from western to eastern Germany had totaled nearly DM 1.0 trillion since 1 990.

There are in addition united Germany’s considerable international liabilities, for example its support for the process of democratic reform and consolidation in the countries of Central and Eastern Europe as well as in the newly independent republics of the former Soviet Union.