After Europe and the rest of the world, fell victim to the coronavirus pandemic, the German Federal Government, together with the German Federal States acted swiftly on a stimulus package. This package is aimed at assisting German citizens during this crisis and mitigating the economic damage caused by the COVID-19 pandemic.
Since the first announcement of the package, there have been several adjustments, with the Ministry of Finance injecting more funds for businesses experiencing financial difficulties. This is a breakdown of Germany’s economic response to the coronavirus crisis.
ECONOMY STABILIZATION FUND
On March 27, 2020, the German government adopted the Economy Stabilization Fund as an economical protective shield against the COVID-19 pandemic. The fund aims to assist businesses in the real economy, whose decline or threatened existence, could significantly affect the economy. Germany is the financial powerhouse of Europe, and an economic slump could have damaging results on both the country and the continent.
Fund applications are handled directly by the Federal Ministry of Economics. An amount of €600 billion has been made available to qualifying business. Eligible businesses are those that:
- Are directly impacted by the COVID-19 pandemic
- In good financial standing with no difficulties as of December 31 2019
- Exhausted other funding options
- Contribute to employment security in Germany
- Show positive intentions to continue operations post COVID-19 crisis.
SPECIAL SUPPORT PROGRAM FOR START-UPS (FUTURE FUND)
This Special Start-up Support Program aims at assisting start-ups and young emerging companies with financial support. The government announced an amount of €2 billion to the fund. This is a big win for newly-developed businesses as such funds would not ordinarily be made available.
REGIONAL SUPPORT PROGRAMS
This fund, established by the German federal states, aims at supporting programs assisting affected businesses at a state level. By doing so, companies can retain employees and keep the economy going during this global crisis. The state support programs will assist with financing non-repayable grants and supporting the government in guarantee programs.
SUPRANATIONAL SUPPORT PROGRAMS
As part of the European Union, Germany has access to funds made available by the European Central Bank. The ECB launched a pandemic emergency purchase program, allowing applicants to access funds for acquiring eligible financial assets. An amount of €750 billion has been assigned to the scheme.
Furthermore, The Federal Government announced measures to assist students with interest-free loans. Also, tax relief measures have been put in place, as well as other financing options offered by the KfW finance program.
In addition, Germany plays a significant role in the global response to the COVID-19 pandemic. Recently the government announced €750 million to be used in the research and development of a coronavirus vaccine. The announcement came after a meeting with German Chancellor, Angela Merkel.
As restrictions begin to loosen with companies reopening and people returning to work, there is still a long way to go. Currently, Germany is facing a recession as a result of the economic damage caused by the COVID-19 pandemic. To learn more about the different mitigation packages available, visit: Coronavirus Loans to Mitigate Economic Damage in Germany.