BERLIN - The German government plans to borrow up to €350 billion (US$370 billion) as part of its effort to mitigate the impact of the coronavirus disease (Covid-19) pandemic.
As much as €150 billion will be allocated to finance measures to handle the pandemic while €200 billion will be used to establish a rescue fund for companies and fund corporate loans, said Germany’s Deputy Finance Minister Joerg Kukies.
“The extent of the federal government’s actual borrowing under the rescue fund is currently not foreseeable, since this depends on the extent to which companies will make use of rescue funds,” Mr Kukies told Bloomberg, Sunday (22/3).
The €150 billion new debt is part of a supplementary budget, which is expected to be approved by Chancellor Angela Merkel’s cabinet on Monday (23/3). The proposal will be presented to the Bundestag (the German Parliament’s lower house) on Wednesday (25/3) and moved to the Bundesrat (the Parliament’s upper house) on Friday (27/3).
The German Ministry of Finance has estimated that the country’s economy could slump by at least 5% due to the Covid-19 pandemic. The government has so far offered direct assistance to companies and low-income earners and established a rescue fund to bail out businesses most heavily affected by the outbreak. (MS)