Germany was ready for an economic crisis caused by the pandemic coronavirus, better than the rest thanks to years of policy, economy and fiscal discipline, writes Bloomberg
The government has long adhered to a clear strategy of maintaining fiscal balance and avoid deficits. Funds attracted through the issuance of debt were used for additional investments, and did not go to Finance current necessary expenses. The national debt of Germany is one of the lowest in the Euro area, hovering around the level of 60 percent of GDP.
This policy has received the name “black zero” (with references to the zero budget deficit), it adhered to the former Finance Minister Wolfgang Schaeuble, and then adopted his successor, Olaf Scholz. It was often criticized by the international financial institutions (such as the international monetary Fund), which indicated that the authorities are addicted to excessive savings miss the opportunity to develop the economy and stimulate investment by large expenditures.
Separately the behavior of Berlin criticized the US President Donald trump, who demanded from Germany spending a fortune (mostly for American goods and services) for the sake of balancing the trade balance. It is the trade deficit with China led to a trade war, lasting from the end of 2017.
The German government has consistently maintained that he is not going to incur debt, in order to be able to respond to future crises and increase targeted spending. Now it has received confirmation that the chosen strategy was correct, the newspaper writes. To shake the belief in their own right can hardly even matters economists, who are interested, fit the current higher expenses of the budget in the usual fiscal policy.
German Chancellor Angela Merkel has announced the launch of a program of state aid to the regions. In the framework of it will be allocated 540 billion euros. Payments are based on small businesses, as well as the most crisis-affected sectors of the population.
