(Bloomberg) -- Chancellor Angela Merkel's government is asking lawmakers to approve a spending plan for next year that raises planned new debt by about 70% to pay for the fallout from the coronavirus pandemic.
The government is seeking approval to raise net new borrowing to more than 160 billion euros ($190 billion) from 96.2 billion euros in the latest draft, according to a document obtained by Bloomberg News. Aid to companies struggling to survive amid government-imposed lockdowns would account for most of the increase, at around 40 billion euros, the document shows. The government may have to borrow less than planned this year as not all funds will be drawn down by companies.
“We have planned to borrow a little over 300 billion euros for 2020 and 2021 combined. This will remain so, with slight modifications,‘' German Finance Minister Olaf Scholz said after a Group of 20 teleconference, speaking from Berlin.
“We can already see now that we will not have to spend all the credit appropriations we have for 2020 and that we will have to spend more for 2021,” he said.
In an interview with the Bild am Sonntag newspaper published earlier, Scholz said the partial restrictions in the country's economy in November may have to continue into December and that financial support for shuttered companies should also be extended in that event.
Under the so-called November aid, companies can get 75% of their previous year's revenue and extending that benefit into December would be “financially challenging,” said Scholz, who's also vice chancellor and his Social Democratic Party's top candidate for Germany's 2021 federal election.
Budget committee lawmakers are set to discuss the Finance Ministry's proposal laid out in the document at a meeting on Thursday, sealing the 2021 draft budget. Bild-Zeitung reported on the budget plans earlier.
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