Hesse's Fiscal Management Wins Praise as State Plans New Debt Utilization
Hesse's fiscal management has received high praise from rating agency Scope. The state boasts a solid budget situation, a conservative debt policy, and a well-funded pension fund for civil servants. However, it faces challenges due to spending pressure.
Hesse's finance minister, Alexander Lorz, has announced plans to utilise new debt allowances approved by the Bundesrat. These allowances permit states to borrow up to 0.35% of their GDP. Lorz is set to reveal details of the 2025 supplementary budget in Wiesbaden on October 28, during a special session of the state parliament.
Despite its solid fiscal standing, Hesse faces limited expenditure flexibility due to spending pressure. This pressure impacts the state's budget leeway in the forecast period. However, Hesse manages taxpayers' money carefully and reliably, as noted by Scope. The state also has a favorable debt profile with limited contingent liabilities and excellent market access.
Hesse's fiscal policy is expected to receive a top mark from Scope, reflecting its above-average revenue flexibility, conservative debt policy, and adherence to the debt brake. However, the state must navigate spending pressure to maintain its solid budget situation.
