Germany to Give Loan Guarantees to Companies Worth $109 Billion

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Germany’s ruling coalition agreed on a financial-aid package for companies suffering from the fallout of the Ukraine war that includes loan guarantees worth as much as 100 billion euros ($109 billion).

The loans would be made available through the KfW state development bank and are meant to help companies such as energy firms that have become overburdened by collateral requirements amid soaring gas and electricity prices, Finance Minister Christian Lindner and Economy Minister Robert Habeck announced in Berlin on Friday.

The government also agreed to set up a separate program of favorable loans worth up to 7 billion euros for companies facing liquidity issues.

“As a result of the Russian war of aggression, many companies are facing great uncertainty,” the finance and economy ministries said in a joint emailed statement. “The sanctions taken by the international community are hitting the Russian economy hard, but are also affecting companies in Germany.”

Having already made hundreds of billions of euros available to offset the impact of the coronavirus pandemic, Chancellor Olaf Scholz’s ruling coalition is now attempting to protect the economy from the impact the war in Ukraine and dampen the effect of soaring energy costs.

As well as the KfW loans, the government is also planning to inject direct capital to stabilize companies in trouble, a similar mechanism to the economic stabilization fund created after the pandemic struck, the ministries said, without specifying an amount.