German Cabinet OKs plan to borrow more to finance stimulus

BERLIN (AP) — Germany’s Cabinet on Wednesday approved plans to borrow another 62.5 billion euros ($70.6 billion) to help finance a stimulus package, bringing the new debt the country is running up to combat the coronavirus crisis to 218.5 billion euros ($246 billion).

The 130 billion-euro stimulus package thrashed out two weeks ago includes a six-month cut in the main value-added tax from 19% to 16% to encourage consumers to buy.

It also features a 300-euro per child bonus for families, help for debt-laden municipalities and increased financial incentives for electric and hybrid vehicles.

The crisis has derailed the German government’s dedication to keeping its budget balanced, long a point of pride. After six years in the black, it already is borrowing 156 billion euros to finance existing rescue packages and to cover an expected shortfall in tax revenue.

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The plan to borrow more needs parliamentary approval.

Germany has Europe’s biggest economy. It went into a recession in the first quarter that is expected to deepen in the current quarter, but saw a less severe death toll in the coronavirus pandemic than several other European countries. Restrictions on public life started easing in late April.

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