Germany pushes up 2021 debt plans to finance new coronavirus aid

German Finance Minister Olaf Scholz is planning to take on “much more debt” than initially planned next year to finance new coronavirus aid measures and help companies survive the second wave of the pandemic, a government source said on Wednesday.

Chancellor Angela Merkel and Scholz on Wednesday pressed regional leaders to agree to a partial lockdown which would force restaurants, bars, fitness studios, discos and cinemas to close in November. Schools and nurseries should remain open as well as shops under certain conditions.

The German parliament suspended the debt brake this year to allow the government to take on net new debt of up to 218 billion euros ($257.65 billion) to finance an unprecedented array of rescue and stimulus measures.

Scholz has said he will ask lawmakers to suspend the constitutionally enshrined debt limits again next year.

But the initially eyed sum of 96 billion euros for 2021 will not be enough to help firms get through the second wave of the pandemic, a government official told Reuters on condition of anonymity.

“It’s probably going to be rather 120 billion euros,” the official said.

People familiar with the matter told Reuters earlier on Wednesday that Scholz is mulling a coronavirus aid package worth up to 10 billion euros to compensate firms forced to close next month due to a new round of lockdown measures.

The government is also planning to extend a liquidity aid program and other measures, which would expire by the end of this year, until mid-2021.

Scholz and Economy Minister Peter Altmaier are expected to present their new package of aid and rescue measures during a news conference later this week.