German parliament passes €1.1t virus rescue package

Empty tables stand in front of a restaurant at the Gendarmenmarkt, as the spread of the coronavirus continues, in Berlin, Germany, March 24, 2020. — Reuters pic
Empty tables stand in front of a restaurant at the Gendarmenmarkt, as the spread of the coronavirus continues, in Berlin, Germany, March 24, 2020. — Reuters pic

BERLIN, March 25 — Germany’s parliament voted through today a package of measures worth almost €1.1 trillion (RM5.2 trillion) to shield Europe’s largest economy from the impact of the coronavirus pandemic.

Scattered sparsely throughout the chamber to limit the possibility of infection, MPs agreed €156 billion of new borrowing, backing up a broadside of support to business and the health system as well as hundreds of billions in guarantees for bank loans to firms.

Germany’s unprecedented support package began racing through the legislative process the same day Republican and Democratic leaders in the United States Senate announced a deal on a never-before-seen US$2 trillion relief programme for the world’s top economy.

The package will now go to Germany’s second house representing the federal states, with passage almost certain as state leaders have unanimously voiced their support.

“Please keep in mind the rules on keeping your distance!” parliament president Wolfgang Schaeuble urged MPs between votes as they moved around the historic Berlin chamber.

The new borrowing blasts through a financial-crisis-era constitutional rule drastically limiting budget deficits.

Berlin will create an “economic stabilisation fund” offering €400 billion in guarantees for companies’ debts, €100 billion for lending to or taking stakes in firms and €100 billion in support for state-owned investment bank KfW.

With its firepower tanked up by €357 billion, KfW will in future be able to guarantee some €822 billion in lending.

The federal government will offer smaller firms up to €50 billion of handouts.

Today’s package also includes €3.5 billion of immediate support for supplying the health system with needed protective equipment and for developing a vaccine and other treatments, as well as €55 billion that can be freely deployed as needed to fight the pandemic. — AFP

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