Germany's debt to GDP ratio is set to fall by 2.6 percentage points after officials discovered an accounting error at a government-owned bad bank.
FMS Wertmanagement, the bad bank of the 100% government-owned Hypo Real Estate Holding, did not take into account change in the value of collateral in relation to a portfolio of derivatives. The bank therefore adjusted its balance sheet lower by €24.5bn in 2010 and by €31bn for the year to 30 June 2011. FMS will now only contribute around €161bn to Germany's debt this year, down from €216.5bn in 2010. The German finance ministry said the change would reduce its 2011 debt to GDP ratio from a September forecast of 83.7% to 81.1%. Debt to GDP for 2010 is now thought to have come in...
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