German government approves a a 750 billion euro package to counter coronavirus economic effects.
Berlin government has announced it will take out new loans as part of an unprecedented package of measures totaling 750 billion euros ($ 800 billion), adopted to cushion the adverse effects of coronavirus pandemic (COVID-19).
German Chancellor Angela Merkel’s cabinet signed the spending plan at an emergency meeting Monday, a Berlin government spokesman announced. The German leader led the meeting through a video conference.
Chancellor Angela Merkel went into self-quarantine after learning that her doctor, who had vaccinated her against pneumonia on Friday, tested positive for COVID-19.
Merkel, 65, will continue to work from home and be tested repeatedly over the next few days, his spokesman said Sunday, adding that it is still too early for a conclusive test. Don't use plagiarised sources.Get your custom essay just from $11/page
After the economic implications of the crisis became clear, the German Executive decided to significantly increase spending and renounce the “black zero” policy, has been the German government’s policy for a decade. The term refers to a balanced budget without any new government borrowing—a political stance that’s championed by Angela Merkel’s center-right Christian Democrats (CDU) and enforced in the German constitution itself since 2011.
According to a Ministry of Finance estimate, Germany’s economy would shrink by at least 5% this year.
“That’s a very big package with a lot of measures,” finance minister Olaf Scholz told reporters during a joint news conference with Economy Minister Peter Altmaier, adding that Germany will double the number of beds in intensive care units.
Germany’s additional € 156 billion budget, which will be financed through new loans, shows the Berlin authorities’ determination to use “all available means” to combat the effects of the epidemic, Scholz added.
Germany will borrow € 156 billion this year to finance measures to limit the impact of the epidemic. A bail-out fund set up to acquire corporate stakes and finance business loans could make debts of up to 200 billion euros, if needed. The final figure on the amount made available to the fund depends on how many companies will request Government support, said Deputy Finance Minister Joerg Kukies.
Also, on Monday, the government initiative initiated by which the companies facing difficulties receive loans of approximately 500 billion euros through the German state bank KfW.
In addition, the stability fund will provide loan guarantees of 400 billion euros to prevent companies from being able to pay off their outstanding debts, so that the total support measures reach 750 billion euros.
Federal economics minister Peter Altmaier said Berlin would use such measures “very carefully”.
“We will scale these interventions in such a way that we intervene as little as possible in markets, and maintain private initiatives as far as possible.”