Germany - Updates on the COVID-19 fiscal measures adopted by the German government (DGB-BVV)


Assuring companies fast, direct and uncomplicated access to liquidity: Provision of loans through the banking system and backed by a Federal guarantee covering 100% of the loan amount through Germany’s promotional bank KfW. The loan amount will be three months of a company’s revenues, up to a maximum amount of €800,000 per company. To qualify to this programme, companies must have been profitable either in the past year or over the average of the past three years. The interest rate on these loans will be three per cent. The maturity of the loans is up to ten years, with the option to waive repayment for the first two years.


Budgetary measures: German parliament to approve a €122.5bn of additional spending funded by €156bn of credit authorisations. The balance between these numbers is essentially Germany’s expectation of lower tax revenues compared to projections as a result of the economic slowdown.

Debt: The Government foresees that Germany will exceed the maximum possible amount of new debt under the country’s constitutional debt brake. Therefore, the German government will ask parliament for an exemption under the extraordinary crisis situation clause of the debt brake which is foreseen under Article 115 of Germany’s constitution.

Economic Stabilisation Fund (ESF): Germany is using and expanding the institutional framework of the response given to the 2008/9 financial crisis, the Financial Markets Stabilisation Fund through which all bank recapitalisation and guarantee schemes were implemented to set up an Economic Stabilisation Fund targeting the real economy - i.e., corporations excluding banks. To qualify for investments or guarantees, companies have to meet two of the three criteria of revenues exceeding €50Mio., balance sheet volume exceeding €46Mio. and 249 employees. There is also a clause allowing that corporations that do not pass this test can be declared eligible if they are declared as significant for the German economy or security or if they are active in specified sectors.

Pillars of the ESF:

  1. Recapitalisation instrument with equity instruments (direct Equity, convertibles, hybrids, silent participations) at its disposal to invest if and when the need arises to stabilise a corporation. The funding of this instrument can raise up to €100bn with debt issuance.
  2. Funding provision in case of tight liquidity situations and support to refinancing of capital markets through ESF complementarity KfW loan guarantee programs. KfW progras get guarantee extension of up to €400bn covering debt securities of eligible corporations, with a flexible definition of debt securities and a maximum duration of the guarantees is five years.
  3. Authorisation to the ESF to provide up to €100bn of financing to fund KfW programs.

Direct support for small and single-indivual businesses: In addition to Germany’s existing social security system, KfW guarantee programs, and the Economic Stabilization Fund, the German government is proposing a legislation to use €50bn for direct grants in support to the approximately 3 million small business existing in the country to compensate the fact that these businesses are too small for the process of corporate bank credit and also do not qualify for social benefit system. Eligibility is defined as having up to 10 employees, and there will be one-off payments ranging from €9,000 to €15,000 depending on the size of the respective businesses, in particular to cover recurring expenses such as rents.

Further legislation:

  1. Provisions to avoid technical insolvency procedures in temporary liquidity difficulties by extending the relevant deadlines.
  2. Low-income families receive additional support through increases to child support allowances and easier access to our minimum social support schemes.
  3. Temporary relief to protect tenants from eviction due to income losses in the current situation.
  4. Financing to hospitals with the aim to double the number of available intensive care beds.


UPDATE – 13 MARCH 2020

Germany has put in place a comprehensive package of measures to assure the continued provision of credit to German corporates of all sizes using fiscal instruments. The package includes:

  • An unlimited volume of Federal guarantees for loans provided by Germany’s banking system to the corporate sector.
  • Immediate access to these Federal guarantees through existing programs with the promotional bank KfW.
  • Tax measures to improve liquidity in the German corporate sector.