Economic stabilisation fund
The measures to stem the outbreak of the coronavirus are also impacting on the economy: companies are suffering liquidity problems through no fault of their own, and jobs are at risk. This is why the German government has decided to establish an economic stabilisation fund.
To ensure that companies have sufficient liquidity, the German government will raise more if necessary on the capital market
Foto: picture-alliance/ZB/Lösel
The economic stabilisation fund aims to guarantee the liquidity and solvency of companies which were healthy and competitive prior to the coronavirus pandemic. The economic stabilisation fund supplements the planned KfW (Kreditanstalt für Wiederaufbau) special programmes.
Main instruments
The economic stabilisation fund will have the following instruments at its disposal:
- A guarantee framework of 400 billion euros that is to help companies re-finance themselves on the capital market (to bridge liquidity bottlenecks)
- A credit authorisation for 100 billion euros to strengthen the equity base of businesses (recapitalisation)
- Authorisation to take out loans for another 100 billion euros to refinance the special programmes of the KfW (Kreditanstalt für Wiederaufbau).
To finance these measures, the German government will raise additional funds as needed on the capital market, through the Federal Republic of Germany – Finance Agency, which is the established channel.
The measures address companies in the real economy that meet at least two of the following three criteria:
1) A balance sheet total of more than 43 million euros
2) More than 50 million euros in sales revenue
3) More than 249 employees on annual average
On a case by case basis smaller companies may also be reviewed for eligibility, if they are important for the country’s critical infrastructure.