Coronavirus Response German Cabinet Agrees to 750 Billion Euros in Emergency Aid Measures
As the corona crisis sweeps over Germany, the government in Berlin has assembled an unprecedented aid package aimed at supporting families, renters, employees, freelancers and companies. The cabinet, under the leadership of German Chancellor Angela Merkel, agreed on Monday to several vast protective measures and far-reaching changes to the legal code. To ensure that the aid reaches its intended recipients quickly, the Bundestag, Germany's parliament, is to consider the aid packages on Wednesday, with the Bundesrat, the German deliberative body that represents the country's 16 federal states, following on Friday.
The government is making massive amounts of money available. After six years of taking on no new debt, the country's commitment to a balanced budget is being abandoned, with the cabinet approving a supplemental budget calling for 156 billion euros in new borrowing. To enable the measure, German parliament on Wednesday is to enable an emergency amendment to the country's "debt brake" laws.
The following concrete measures are planned:
Small companies and individual freelancers like artists and caregivers are to be eligible for up to 15,000 euros in direct subsidies over a period of three months. A total of 50 billion euros has been earmarked for this program.
Larger companies are to be stabilized with capital from a stabilization fund. In cases of need, the state will also be allowed to become a stakeholder in companies. Plans call for up to 400 billion euros in credit guaranties for the companies to be made available. Up to 100 billion euros has been earmarked for possible direct investments in companies.
In addition, an unlimited special credit program from the state-owned development bank KfW was launched on Monday. The bank has also earmarked 100 billion euros for liquidity assistance.
An additional measure prevents landlords from evicting renters if they can no longer pay their rent due to the corona crisis.
For new applications to Germany's welfare program, known as Hartz IV, new applicants will not be required to submit information on their assets or on the size of their monthly rent payments for the next six months. Families that have lost a large share of their incomes are to be given easier access to the children's allowance.
Expanded regulations pertaining to Germany's short-time work program - in which the government pays a share of employee salaries if they are temporarily unnecessary for production – will make it easer for companies to hold onto workers instead of laying them off.
Germany's hospitals are to be supported with more than 3 billion euros in funding.
The cabinet also agreed to give the federal government greater leverage when the country is facing a pandemic. It also loosened bankruptcy rules and agreed on regulations allowing companies to hold annual shareholder meetings online.
According to Finance Minister Olaf Scholz, the entire package is worth some 750 billion euros.
German Chancellor Angela Merkel participated in the cabinet meeting via video conference since she has been quarantined at home since Sunday evening. A doctor who gave her a vaccine on Friday later tested positive for coronavirus.