Experts say Germany needs to rein in debt-financed defense spending. writing. The EU's largest economy is investing heavily in strengthening its armed forces to counter a hostile Russia. Most of the defense expenditures are exempt from the so-called "debt curb", which limits the amount of loans the government can borrow, that is, a large part of the debt taken to finance armaments is not covered by the regular budget. But the Council of Economic Experts, an independent body that advises the government, warned that this wave of military spending would strain the budget for years to come. "First of all, the defense expenses, which are financed by borrowed money, are rising sharply," said council member Achim Troger. "From an economic point of view, it is simply not sustainable to finance defense spending on this scale on a regular basis with borrowed funds." German defense spending is expected to rise sharply to reach around 110 billion euros in 2027, with much of it financed through debt. Economists warn that without measures to curb spending, Germany's public debt-to-GDP ratio may rise to 98% of GDP by 2040, from about 64% today. Some fear it could lead to painful tax increases or spending cuts.