GERMANY: The federal government has agreed to changes in the national budget for 2025 that will replace a provision for grants worth €4∙5bn by equity increases in Deutsche Bahn’s infrastructure business, DB InfraGO.
In the same statement on August 16, the government announced that DB would receive a €3bn federal loan that will enable it to redeem bonds previously issued on the market. With a term of 34 years, the loan is expected to lead to significant savings in financing costs; it will be designed to ensure that it is not a hidden subsidy.
The 2025 federal budget provides for a total of €15∙1bn to be invested in Germany’s railway infrastructure. This will be achieved by the €4∙5bn equity increase which is in addition to a €5∙9bn equity injection that had previously been agreed in the draft budget. A further €4∙7bn will be granted in subsidies.
The government states that these arrangements do not increase DB’s debt and that the equity-to-debt ratio will be improved. Discussions between government and DB on the appropriate return expectation in relation to the equity injections are understood to be well advanced.
The government notes that neither the €3bn loan nor the additional equity increase will be considered as a financial transaction in the so-called ‘debt brake’ introduced in 2009 which caps government borrowing.
