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Source: German Ministry of Finance – in English
23 March 2020
Financial markets

German government activates the Economic Stabilisation Fund

The German government today launched an economic stabilisation fund which will implement the measures needed to stabilise the German economy and safeguard jobs. To this end, on 23 March 2020, the federal cabinet adopted a draft text for the governing coalition parties. This will enable the German Bundestag to submit legislation establishing the fund.
We are doing our utmost to stem this unprecedented crisis. The Fund gives us the financial capacity we need to protect the economy, jobs and large German companies. The Fund allows for large-scale assistance on top of the KfW’s loan programme, which has already been adopted. This includes state guarantees as well as the option to acquire temporary public holdings in businesses.German Finance Minister Olaf Scholz
The instruments of the Economic Stabilisation Fund comprise:
A guarantee framework of €400bn to help businesses find refinancing on the capital market
Recapitalisation measures totalling €100bn to increase capital and ensure businesses remain solvent
Loans of up to €100bn to refinance the KfW’s special programmes
Access to these instruments will be given to businesses which fulfil the following criteria:
Balance sheet total exceeds €43m
Sales revenue exceeds €50m
Annual average of more than 249 employees
To make sure that as many businesses as possible can access these instruments, the group of eligible beneficiaries will be expanded beyond the European Commission’s definition of small and medium-sized businesses. Furthermore, access will also be granted to smaller businesses that are particularly important for infrastructure.
The Economic Stabilisation Fund will initially run until the end of 2021.
To finance these measures, the German government will take out additional funds on the capital market as and when needed, using its established, reliable market access via the German Finance Agency.
Recapitalisation measures may be subject to specific conditions; specifically, these conditions may concern the remuneration of management, the disbursement of dividends and the use of funds provided by the state.
Finally, certain company law provisions will be adjusted to make sure that assistance is quick and unbureaucratic.

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