Germany to return to austerity after coronavirus crisis: Minister

Germany to return to austerity after coronavirus crisis: Minister

Outbreak of the coronavirus disease (COVID-19) in Frankfurt
A woman walks past love locks on the Eiserner Steg bridge during a partial lockdown in Frankfurt, Germany, March 23, 2020, as the spread of the coronavirus disease (COVID-19) continues. REUTERS/Kai Pfaffenbach

BERLIN: The German government will return to its savings policy once the coronavirus crisis is over, Economy Minister Peter Altmaier told ZDF broadcaster on Tuesday (Mar 24), adding that Europe's largest economy had committed to paying debt back from 2023.

Germany on Monday agreed a package worth up to €750 billion (US$812.25 billion) to mitigate the damage of the coronavirus outbreak on Europe's largest economy, with Berlin aiming to take on new debt for the first time since 2013.

"Once the crisis is over - and we hope this will be the case in several months - we will return to austerity policy and, as soon as possible, to the balanced budget policy," he said.

Germany was taking the money out under favourable capital market conditions, added Altmaier.

"The conditions are only so favourable because everyone believes in us and trusts that we will only do this as long as is necessary," he said.

The government expects the pandemic to plunge the economy into recession. Finance Minister Olaf Scholz has said his latest budget plans are based on the assumption that gross domestic product will shrink by roughly 5 per cent this year.

Germany has 27,436 confirmed coronavirus cases and 114 people have died, the Robert Koch Institute for infectious diseases said on Tuesday.

The government has announced a range of measures to cushion the blow for companies during the crisis and Altmaier reiterated that the state was prepared to buy stakes in companies that were struggling but only in the most extreme cases.

Seeking to reassure firms and freelancers, Altmaier also said it should be clear from the middle of next week where they can obtain aid to help tide them over during the crisis and German authorities were trying to avoid bottlenecks.

"It should be as unbureacratic as possible," he said, reiterating that the government was doing what it could to ensure that coronavirus does not lead to job losses.

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Source: Reuters/nh