Key Officials Agree to Boost Bonn Spending
Key government ministers, succumbing to pressure from abroad, agreed in principle today to boost domestic spending by injecting billions of marks into the West German economy, Economics Ministry officials said.
The ministers are slated to present the plan to the full government Cabinet for approval Wednesday, according to a well-informed ministry official who spoke on condition of anonymity.
Industrialized nations, led by the United States, have for months been urging that West Germany stimulate its slow-growing economy as a way of correcting the worldwide trade imbalance and halting the slide of the American dollar.
Economics Ministry officials said the plan would inject billions of marks into the economy by sharply increasing the loan capacity of the Kreditanstalt Fuer Wiederaufbau, a government agency that provides West German companies with subsidized loans for new business ventures.
They said it would also reduce interest rates charged on loans provided by the Frankfurt-based agency.
Meanwhile, West Germany’s central bank, the Bundesbank, moved to bolster the dollar in Frankfurt money markets today.
That increased speculation among traders that the central bank will cut its discount rate at a meeting of its governing council Thursday.
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