German minister: Debt won’t reach crisis level

German Finance Minister Olaf Scholz. (AP)
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Updated 30 September 2020

German minister: Debt won’t reach crisis level

  • Germany is borrowing a net €217.8 billion this year to finance rescue and stimulus packages

BERLIN: Germany’s debt load won’t reach the level it did in the financial crisis a decade ago as a result of the coronavirus disease (COVID-19), the finance minister said Tuesday, and will still look better than that of Germany’s peers in the Group of Seven did before the outbreak.

Olaf Scholz was presenting to parliament a draft 2021 budget that foresees significant borrowing for the second consecutive year as Germany, Europe’s biggest economy, works to limit the economic fallout of efforts to contain COVID-19.

The crisis has derailed the government’s dedication to keeping its budget balanced, long a point of pride. After six years in the black, it is borrowing a net €217.8 billion ($253.7 billion) this year to finance rescue and stimulus packages and cover an expected shortfall in tax revenue. Next year, it plans to borrow a further €96.2 billion.

“If we didn’t act, we would have to use much more money, and at the same time squander the future of our country,” Scholz told lawmakers. 

“Not acting would be much more expensive than acting.”

Scholz noted that Germany’s debt load dropped below 60 percent of gross domestic product last year. “The debt ratio will not rise to the level it did in the last financial crisis,” he added. “Back then, our debt went up to over 80 percent of economic output; this time, according to current calculations, we will climb to about 75-76 percent ... and that is a good sign that we will manage to get this debt ratio back down in the coming years.”

In comparison with Germany’s peers in the G-7 of leading industrial powers, Scholz said, “our debt ratio after the crisis will be lower than in all these countries before the crisis.”

The 2021 budget plan calls for spending of €413.4 billion next year, down from this year’s exceptionally high €508.5 billion, a figure which was swollen by spending on rescue packages.

Nvidia deal for Arm will drive computing power growth, says SoftBank’s CEO

Updated 14 min 49 sec ago

Nvidia deal for Arm will drive computing power growth, says SoftBank’s CEO

  • Saudi Arabia's Public Investment Fund (PIF) is a an anchor investor in the $100 billion Vision Fund

TOKYO/DUBAI: SoftBank Group Corp. CEO Masayoshi Son said on Thursday the sale of chip designer Arm to Nvidia Corp. will drive growth in computing power, in his first public comments since the $40 billion deal was announced in September.
Son made the comments at a virtual summit about artificial intelligence hosted by Saudi Arabia, an anchor investor in the $100 billion Vision Fund, at which he reiterated his belief that AI would transform society.
The Nvidia deal, part of a series of asset sales by Son, whose group has been shaken by soured investments and the COVID-19 pandemic, has raised concerns it will threaten Arm’s role as a neutral supplier in the industry.
Son is set to speak next week with Nvidia CEO Jensen Huang at SoftBank World, the group’s annual event for customers and suppliers that is being retooled as it focuses on investing.
SoftBank’s growing cash pile is driving speculation about future investment plans, with the Vision Fund targeting external funding for a blank-check company, a source said, in a sign the group is regaining its mojo.
“I am a risk taker,” Son said on Thursday.
Rajeev Misra, CEO of SoftBank Investment Advisers which oversees the Vision Fund, said the market share gained by online commerce companies in the last six to eight months is more than what they gained in the previous four years put together.
“COVID has accelerated the acceleration of AI even further,” Misra told the same conference, adding in the 105 companies Vision Fund 1 and 2 have invested in, artificial intelligence is the core of their businesses.