German Cabinet Okays $70 Billion in Debt to Combat Recession

Chancellor Angela Merkel’s cabinet signed off on plans to raise another 62.5 billion euros ($70 billion) in debt to finance the country’s largest stimulus program in recent history. The proposal has yet to be approved by parliament and would increase net borrowing to 218 billion euros this year. In March the Bundestag, or lower house, had already authorized a debt increase of 156 billion euros.

After years of fiscal discipline that brought Germany scorn and admiration alike, debt had fallen from over 80% of gross domestic product in the wake of the 2008 financial crisis to around 60%. Now it is again projected to rise to 77% of GDP.

Separately Merkel will meet with the premiers of Germany’s 16 states on Wednesday to discuss remaining social distancing rules as well as testing strategies in preparation for a possible second wave of the coronavirus.

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