BERLIN: Germany announced to add 5 billion euros to helping the country’s needy municipalities, sweetening a €10 billion, or $11.2 billion, investment plan announced last fall.
The announcement comes amid calls from Germany’s partners in the eurozone to do more to stimulate the country’s domestic demand, rather than focus primarily on the German export economy.
The stimulus plan also followed a speech on Monday in which Chancellor Angela Merkel, often seen as the stern enforcer of austerity, reaffirmed her view that budget discipline was essential to economic growth.
The investment in towns and cities will be financed from rising tax revenue and will not affect the government’s pledge to stick to a balanced budget, a status it achieved last year for the first time since 1969.
A statement from the Finance Ministry said Wolfgang Schäuble, the finance minister, and Sigmar Gabriel, the vice chancellor and economics minister, along with other ministers and parliamentary leaders of Ms. Merkel’s grand coalition government, had all agreed “that the goal of a balanced federal budget with no new borrowing may not be challenged by the federal initiative to invest.”
The extra investment will be submitted for cabinet approval on March 18, the Finance Ministry said.
Of the new money, €1.5 billion is to be made available through a supplementary budget this year, and the remaining €3.5 billion from a special fund that struggling municipalities can use through 2018, Finance Ministry officials said.
