German parliament clears record 218.5-bln-euro debt in 2020

Source: Xinhua| 2020-07-02 23:10:32|Editor: huaxia

BERLIN, July 2 (Xinhua) -- The German Bundestag (lower house of parliament) gave the green light on Thursday for the government to take on a record debt of 218.5 billion euros (246.2 billion U.S. dollars) this year to overcome the COVID-19 crisis.

In a second supplementary budget for 2020, the Bundestag approved an additional 62.8 billion euros to finance the government's stimulus package, which includes a reduction of value-added tax, payments for families and support for municipalities in Germany.

"We will not cut back against this crisis and we will not touch the welfare state, which is leading us so efficiently through this crisis, but rather expand it," said Minister of Finance Olaf Scholz.

In his speech in the Bundestag on Thursday, Scholz defended the COVID-19 economic stimulus package worth around 103 billion euros. "What we are doing now is ensure that the economy picks up again," said Scholz.

On Wednesday, the value-added tax in Germany was temporarily lowered from 19 percent to 16 percent until the end of the year. The German government expects the measure to cost around 24 billion euros in lost tax revenues.

Additionally, all German families will receive a bonus of 300 euros per child, while small and medium-sized enterprises (SMEs) in the country would receive emergency credits during the COVID-19 crisis from a purse totaling 25 billion euros, according to the German government.

The debt brake, which is anchored in Germany's constitution, was also suspended. The Ministry of Finance said in mid-May that it expected this year's tax revenues to be 81.5 billion euros below last year's. (1 euro = 1.13 U.S. dollars) Enditem