Coronavirus – German fin min Sholz flags emergency budget of more than EUR150b

Reuters cite unnamed government sources for Finance Minister Olaf Scholz says the debt ceiling will be raised.

On the stimulus package:

  • will include a supplementary government budget of 156bn euros
  • 100bn  euro economic stability fund (will enable government to take equity holdings in firms)
  • 100bn euros in credit to public-sector development bank KfW (for lending to businesses)
  • 400 bn euros in loan guarantees

Totalling those up comes to 750bn EUR.

We are seeing, and will continue to see, economic stimulus both from central banks (monetary policy) and government (fiscal). A criticism I’ve seen is these will not cure the coronavirus. Of course they won’t, what they are intended to do is ease the economic cost. The scientists working on vaccines, cure, and the other health-related concerns are the most important folks right now, but the folks applying the (economic) band aids are doing what they can. Economic support should help stabilise markets (its about dissipating fear right now). 


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