Germany boosts borrowing to tackle war costs

Germany will take on an additional 39.2 billion euros ($42.1 billion) of debt in 2022 to counter the economic impact of the war in Ukraine, sources in the finance ministry said Monday.

The supplementary budget, set to be put to the cabinet on Wednesday, will raise the total of new borrowing for the year to 138.9 billion euros.

The additional debt package was a  "timely and targeted" response to the outbreak of war in Ukraine, the sources said, with the money intended to help businesses and households deal with rising energy costs as a result of the war, as well as financing humanitarian aid to Ukraine.

After years of chasing balanced budgets, traditionally frugal Germany took on huge amounts of debt in 2020 and 2021 to help Europe's biggest economy cope with the coronavirus pandemic, lifting its constitutionally enshrined debt limits to do so.

The government had planned to take on 99.7 billion euros in 2022 as part of its  "core" budget, but the war in Ukraine has forced Germany to adjust its calculations.