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German new debt to rise to 218 billion this year – Merkel ally

Germany’s new borrowing will rise to 218 billion euros this year, Chancellor Angela Merkel’s chief budget lawmaker told Bild newspaper on Monday as Berlin is working on a record stimulus package to counter the impact of the coronavirus pandemic.

The comments by Eckhardt Rehberg followed a Reuters report from last Wednesday in which a senior official said that Germany’s overall new borrowing would probably balloon beyond 200 billion euros this year.

The plan to take on more debt underlines Germany’s massive fiscal shift from Europe’s former austerity champion to one of the biggest spenders in the euro zone’s efforts to counter the economic impact of the coronavirus pandemic.

“With the supplementary budget coming now, there will be around 218 billion euros ($245.23 billion) more debt this year, of which we will have to repay 162 billion starting from 2023 according to the Constitution,” Rehberg said.

The finance ministry is preparing a debt settlement plan for a time period of 20 years, whereby Berlin will have to repay roughly 8 billion euros per year, Rehberg added.

Finance Minister Olaf Scholz is on Wednesday expected to present Berlin’s second supplementary budget within three months, adding 62 billion euros of additional debt to the 156 billion euros of new borrowing already agreed in March.

Germany is planning to use the debt to finance stimulus measures worth more than 130 billion euros to help its economy and the wider euro zone to recover more quickly from the coronavirus pandemic.
Source: Reuters (Reporting by Michael Nienaber; Editing by Michelle Martin)

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