June 4, 2020 / 12:40 PM / a month ago

German stimulus package requires extra budget of some 25 billion euros: Scholz

FILE PHOTO: German Finance Minister Olaf Scholz addresses the media during a news conference in Berlin, Germany May 14, 2020. Michael Sohn/Pool via REUTERS

BERLIN (Reuters) - Germany’s stimulus package to help consumers and companies recover from the coronavirus pandemic will probably require a second supplementary budget worth some 25 billion euros ($28.00 billion), Finance Minister Olaf Scholz said on Thursday.

Chancellor Angela Merkel’s ruling coalition presented stimulus measures worth 130 billion euros ($146 billion) late on Wednesday to speed up the recovery of Europe’s largest economy from the coronavirus pandemic.

The package, which follows a 750-billion-euro rescue package agreed in March, includes a temporary cut in value-added tax, cash handouts for parents, more funds for small firms and bigger incentives to buy electric cars.

Scholz told reporters in Berlin that the government this year would have to shoulder 90 billion euros of the stimulus package, but he added there was still more than 60 billion euros of unused funds from the first 156-billion-euro debt-financed supplementary budget presented in March.

“So if there are still 65 billion euros unused, you can see that we’re talking here about a manageable dimension,” Scholz said, hinting at a volume of roughly 25 billion euros.

A senior government official who spoke on condition of anonymity said he estimated that the second supplementary budget would encompass at least 25 billion euros, maybe even 30 billion euros.

The finance ministry will decide on the exact figure of the second supplementary budget and its financing in the coming days.

Scholz has already said that the newly presented stimulus measures will probably further push up Germany’s overall debt level, suggesting that the second supplementary budget will also be financed with net new borrowing.

As Germany’s measures go substantially beyond any other national emergency programmes from euro zone peers, the sheer scale of its new spending splurge has raised concerns that the discrepancy in aid could increase imbalances in the European Union and distort the bloc’s single market.

Reporting by Holger Hansen; Writing by Michael Nienaber; Editing by Madeline Chambers

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