Germany eyes post-virus stimulus package

BERLIN (Reuters) - Germany is working on a post-coronavirus stimulus package to put Europe’s biggest economy back on track once the outbreak is contained, ministers said on Tuesday.

FILE PHOTO: German Finance Minister Olaf Scholz attends the cabinet meeting in Berlin, Germany February 19, 2020. REUTERS/Michele Tantussi

Chancellor Angela Merkel’s cabinet on Monday agreed a package worth over 750 billion euros ($810 billion) to mitigate the direct impact of the pandemic, with the government aiming to take on new debt for the first time since 2013.

The lower house of parliament is on Wednesday expected to pass the measures, including a debt-financed supplementary budget of 156 billion euros and a stabilisation fund worth 600 billion euros for loans to struggling businesses and direct stakes in companies.

Economy Minister Peter Altmaier told reporters that this week’s aid package was just an initial step in tackling the coronavirus impact, adding that Berlin should not lose sight of enabling a “new upswing” once the crisis was over.

Finance Minister Olaf Scholz told Bild newspaper the economy would need further help once the virus was contained.

In a letter to lawmakers in his Social Democrat (SPD) party seen by Reuters, Scholz said the government would take steps to support the economy as soon pubs, cinemas and shops reopened.

A senior official with knowledge of discussions said talks within the government about post-virus stimulus measures were still at a “very early stage” and no concrete proposals had been made yet.

The government is now focussing on protecting the health of the population and trying to save jobs and companies during the outbreak, the official added.

Another source said it was too early to engage in detailed discussions about a post-virus package.

The state of Bavaria, home of big companies including Siemens and BMW, will double budget funds available to help it cope with the coronavirus to 20 billion euros, its Premier Markus Soeder said, adding that further measures were planned as well.

The neighbouring southwestern state of Baden-Wuerttemberg on Tuesday announced additional aid worth 5 billion euros for small firms and the self-employed and further funding for the regional government to take direct stakes in companies.

The government of the western state of Hesse, home of the Frankfurt banking hub, agreed 8.5 billion euros of measures , its finance minister said, adding that more funds would probably be needed.

State-owned KfW bank said it had received an initial 34 applications for coronavirus crisis-linked loans totalling 1.985 billion euros.

Deutsche Bank received more than 5,300 customer queries on Monday for emergency KfW funding, a spokesman said on Tuesday.

Reporting by Michael Nienaber; Additional reporting by Thomas Escritt, Sabine Siebold and Joern Poltz; Editing by Michelle Martin and John Stonestreet