March 21, 2020 / 12:53 PM / in 4 months

Germany eyes 156 billion euros of new borrowing, 200 bln euros in debt authorization

German Chancellor Angela Merkel and German Finance Minister Olaf Scholz attend the weekly cabinet meeting in Berlin, Germany March 11, 2020. REUTERS/Michele Tantussi

BERLIN (Reuters) - Germany is readying stimulus measures requiring about 156 billion euros ($166.83 billion) in net new borrowing and additional debt authorization of up to 200 billion euros to fight the economic impact of the coronavirus outbreak, according to a draft law and senior officials.

The package will include a supplementary government budget of 156 billion euros, 100 billion euros for an economic stability fund that can take direct equity stakes in companies, and 100 billion euros in credit to public-sector development bank KfW for loans to struggling businesses, the sources said.

The combined sum of possibly 356 billion euros in new debt would represent roughly 10% of Germany’s gross domestic output.

Final details of the measures are being discussed by ministers over the weekend, the sources added.

Finance Minister Olaf Scholz was expected to give a statement later on Saturday.

Chancellor Angela Merkel has vowed to do “whatever it takes” to counter the epidemic’s economic impact and the government has promised an initial half a trillion euros in liquidity guarantees for affected businesses via KfW.

Merkel’s cabinet is set to back the package of fiscal measures on Monday.

A government source had told Reuters on Friday that a 150 billion euro supplementary budget was underway.

Reporting by Holger Hansen, Michael Nienaber, Christian Kraemer; Writing by Ludwig Burger; Editing by Alexander Smith

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