March 18, 2020 / 9:50 AM / 12 days ago

Germany passes budget plans - without coronavirus impact

FILE PHOTO: German Finance Minister Olaf Scholz attends the weekly cabinet meeting in Berlin, Germany March 11, 2020. REUTERS/Michele Tantussi

BERLIN (Reuters) - The German government agreed on Wednesday the main points for the 2021 budget and financial planning until 2024 which, however, do not take account of the coronavirus, government sources said on Wednesday.

However, Finance Minister Olaf Scholz vowed that the government stood ready to do more to help fight the impact of the virus on Europe’s biggest economy.

“The German government will counter the economic effects of the corona crisis with all its might,” Finance Minister Olaf Scholz wrote, according to the draft plans put to cabinet and seen by Reuters.

“The necessary additional means will be made available,” he said.

Under the plans agreed by Chancellor Angela Merkel’s cabinet, there will be no new borrowing. However, experts doubt this commitment will be possible given the expected spending to help the economy weather the coronavirus and expected lower tax revenues and the government has made clear a commitment to no new borrowing is secondary to fighting the virus.

Germany has 7,156 cases and 12 deaths.

Most experts think the economy will shrink this year but the finance ministry wants to send a signal, increasing investment to 42.9 billion euros between 2021 and 2024 and abolishing a solidarity tax for more than 90% of the population.

The cabinet document shows that spending will rise to 370.3 billion euros in 2021 and to 387 billion euros by 2024.

Reporting by Holger Hansen; Writing by Madeline Chambers, Editing by Thomas Escritt

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