(Adds details on debt plans)
BERLIN, Nov 26 (Reuters) – Germany is set to nearly double its 2021 debt plans to more than 180 billion euros ($215 billion) as Berlin extends aid measures to cushion the impact of the COVID-19 pandemic on Europe’s largest economy, two sources told Reuters on Thursday.
Chancellor Angela Merkel and state premiers agreed on Wednesday to extend and tighten a partial lockdown which will see bars, restaurants, gyms and entertainment venues remain closed until at least Dec. 20.
Financial support for businesses that have been forced to close since Nov. 2 will be extended as well, so Berlin needs more money which it plans to borrow on the market.
The debt figure for 2021 is still subject to negotiations among budget lawmakers and will be finalised during marathon talks that are likely to last until Friday morning, the sources added.
The plan to borrow more than 180 billion euros from the market next year is 84 billion euros higher than the 96 billion euros initially foreseen by Finance Minister Olaf Scholz in September.
A finance ministry spokesman declined to comment.
Parliament this year suspended Germany’s debt brake in the constitution to allow the government to take on net new debt of up to 218 billion euros to finance rescue and stimulus measures.
But coalition sources have said that it was unlikely to need the full amount. Scholz has said he will ask lawmakers to suspend debt limits again next year.
Scholz told journalists on Sunday that total new debt for the years 2020 and 2021 would be higher than the previously envisaged 300 billion euros, without providing a breakdown.
Germany has taken unprecedented steps to help companies and small businesses to get through the crisis, freeing up billions of euros to prevent the economy shrinking further.
The government expects gross domestic product to contract by a calendar-adjusted 5.9% in 2020 and rebound by 4.4% in 2021.
$1 = 0.8401 euros Reporting by Michael Nienaber Editing by Riham Alkousaa and Susan Fenton