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Germany to spend US$146 billion on stimulus package

4 June 2020 16:10

BERLIN. KAZINFORM Germany's governing parties have agreed to a stimulus package worth 130 billion euros (US$146 billion) to help the country's economy recover from the coronavirus pandemic, Chancellor Angela Merkel said late Wednesday after two days of marathon talks.

According to the German press agency, dpa, the raft of measures include billions in aid for struggling industries; additional funding for municipalities as they deal with growing unemployment and lost tax revenue; and a one-time 300-euro per child bonus, to be paid out along with other child benefits, WAM reports.

Significantly higher premiums will be offered to encourage people to buy cars - thereby supporting the country's all-important car industry - but the scheme applies only to electric vehicles. Low-emission gasoline and diesel cars were left out.

Meanwhile, the main value-added tax rate will be temporarily lowered from 19 percent to 16 percent. The reduced rate drops from seven percent to five percent, according to a decision paper seen by dpa.

Merkel said drastic spending was needed in order to give the next generations a future.

The total value agreed to in the 21 hours of talks exceeded expectations. Previous reporting said the parties were looking at measures totalling around 80 billion euros.

The 130-billion-euro stimulus package, which covers the years 2020 and 2021, includes around two dozen new measures. It comes on top of a huge coronavirus budget passed in March to help the health care sector and businesses.

Finance Minister Olaf Scholz said an additional supplementary budget will need to be passed for the stimulus, but did not name any sums.

A slew of economic indicators showed a dramatic slump in Germany's industrial sector and consumer spending after the government imposed tough restrictions in March in a bid to contain the spread of the virus. Many of the those measures have since been lifted.

The German economy is expected to contract by 6.6 percent this year, the influential Ifo research institute said late last month. Other estimates have put the fall in the double digits.

Keywords: World News, Economy, Coronavirus,