Germany’s largest state is declaring a financial emergency thanks to skyrocketing energy prices, in an effort to get access to much-needed debt.
North Rhine-Westphalia (NRW), where 20 of Germany’s 50 largest companies are located, proclaimed an “extraordinary emergency situation” earlier this week, in order to receive additional loans from the government, circumventing a law restricting how much debt a state is allowed to take on. The state requested another $5.2 billion in funding to help ease woes stemming from the energy crisis, and is in the midst of redoing its 2023 budget to redirect $3.6 billion in unused Covid-19 relief loans towards energy relief measures.
NRW is home to over 700,000 companies of various sizes, but saw its GDP levels fall 2.8% in the third quarter thanks to skyrocketing electricity and fuel prices. For the time being, only the Bremen and Saxony-Anhalt states have declared states of emergencies warranting a restructuring in their 2023 budgets.
Germany has thus far refrained from declaring a state of emergency, but left the door open to such a scenario should its gas storage facilities dip below 40% capacity come February 1. The country is currently sitting at a level two alert, but could go into a level three emergency, warned head of German Federal Network Agency Klaus Müller, prompting gas rationing among households, businesses, and industries.
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