Overview
With the approval of the Bundesrat (Federal council), the German parliament passed the law on the establishment of an economic stabilisation fund (Economic Stabilisation Fund Act - WStFG) on 27 March, 2020. This laid the foundation for implementing necessary measures to stabilise companies in the real economy and to avert negative effects on the labour market. The granting of stabilisation measures was initially limited until the end of 2021 and was later extended until 30 June, 2022.
In order to anchor both economic stabilisation and financial market stabilisation in one law, the previous "Financial Market Stabilisation Fund Act (FMStFG)" was renamed "Act on the Establishment of a Financial Market Stabilisation Fund and an Economic Stabilisation Fund (Stabilisation Fund Act -StFG)" in accordance with Article 1 of the WStFG. The previous statutory provisions of the FMStFG were combined in the StFG into a Section 1 - Financial Market Stabilisation and supplemented by the newly included provisions on the ESF in a Section 2 - Economic Stabilisation.
The ESF is administered by the Federal Republic of Germany - Finance Agency. On behalf of the Federal Ministry of Finance, it also oversees the stabilisation measures granted by the ESF in the course of the coronavirus pandemic.
As a result of the energy crisis, the Federal government assigned the ESF another function in November 2022, so that it also served to finance measures to mitigate the consequences of the energy crisis. This financing option was available until the end of 2023.
German and European Legal Framework for ESF in the context of the coronavirus pandemic
- The Stabilisation Fund Act (StFG) forms the legal basis for the granting measures of the ESF.
- Specification of legal regulations:
- Ordinance Implementing the Economic Stabilisation Fund (WSF-DV; only available in German language) regulates the design as well as the subsequent termination of the stabilisation measures
- Ordinance Assigning Functions Relating to the Economic Stabilisation Fund (WSF-ÜV; only available in German language) regulates the responsibilities
- Economic Stabilisation Fund Cost Ordinance (WSF-KostV; only available in German language) regulates the reimbursement of to the Federal government by the beneficiaries of the measures
- EU Temporary Framework for State Aid Measure incl. the supplements sets the framework for aid to support the economy as a result of the coronavirus pandemic
- EU-notification of the ESF allowed pandemic-related stabilisation of companies by the ESF without individual notification by the EU Commission under certain conditions, which are listed in particular in the implementing regulation
Legal framework for the ESF in the context of the energy crisis
Legal basis for financing measures resulting from the energy crisis is the third part of the Stabilisation Fund Act (StFG).
Instruments
The Fund was originally set up with a total volume of € 600 bn in the context of the coronavirus pandemic. As part of the ESF extension, this total volume was adjusted to € 250 bn as of 1 January 2022.
| Components of ESF in the context of the coronavirus pandemic | ||
|---|---|---|
Guarantee volume | Recapitalisation volume € 50 bn (originally € 100 bn) | Refinancing of KFW's special programmes € 100 bn |
| Assistance with refinancing on the banking and capital markets (bridging liquidity shortages) | Capital strenghtening via:
| Refinancing of the KfW special programmes allocated by the Federal government |
As a result of the energy crisis, the purpose of the ESF was expanded in November 2022 in order to finance the measures planned by the Federal government to cushion the consequences of the energy crisis in accordance with Section 26a StFG. In the context of the energy crisis, it was used to finance government programmes and measures and to grant loans to KfW. The ESF did not provide own instruments, as previously in the course of the coronavirus pandemic.
In accordance with Section 26b StFG, the ESF was authorised to borrow a total volume of up to €200 bn for this purpose in 2022. Within this €200 bn, the debt authorisation in 2023 amounted to €43.2 bn. Measures in connection with the energy crisis were possible until the end of 2023. The ESF (energy part) was dissolved on 31 December 2023. At this time, the utilisation for financing the package of measures due to the energy crisis amounted to €71.7 bn.
Federal Ministry for Economic Affairs and Climate Action
Further information on Economic Stabilisation Fund is available from the Federal Ministry for Economic Affairs and Climate Action. Applications for guarantees and recapitalisations could be submitted to the Federal Ministry for Economic Affairs and Climate Action until the end of April 2022. The granting of stabilisation measures was possible until the end of June 2022.