Germany eyes 50 bln euro stimulus impact-govt paper

By Gernot Heller

BERLIN, Nov 1 (Reuters) - A German government stimulus package will generate some 50 billion euros ($63.89 billion) in investments and contracts, according to a joint paper by the Economy and Finance Ministries seen by Reuters on Saturday.

Economy Minister Michael Glos said earlier this week the package would introduce a range of steps worth up to about 30 billion euros to boost investment in Europe's biggest economy.

But the paper showed the ministries expected that measures to secure corporate financing and liquidity would also assure some 20 billion euros in investments, creating a total value for the package of some 50 billion euros.

"The government's measures facilitate investments and contracts for companies, private individuals and municipalities in 2009 and 2010 to the tune of around 50 billion euros," the ministries said in the paper.

The ministries added the government wanted to accept "the full extent" of the reduced revenues and additional outgoings resulting from the measures, suggesting the package would be financed by issuing new debt.

"Due to the changes in economic conditions, a federal budget without (net) new debt in 2011 is not achievable from today's viewpoint," the ministries said, adding the government would do everything it could to balance the budget as soon as possible.

Germany had aimed to balance the federal budget in 2011.

The government is working on the stimulus steps as fears grow that a recession is looming in Germany -- a government official told Reuters on Friday German GDP probably contracted by 0.25 percent in the July-September period -- and that the global financial crisis will hit firms and lead to higher unemployment before next September's federal elections.

The plans are due to go to cabinet next Wednesday.

Last month, the government announced a 500 billion euro bank rescue package to help restore confidence in the financial system, but Chancellor Angela Merkel and other politicians want to do what they can to help ordinary Germans. (Writing by Paul Carrel)