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(Bloomberg) -- The German government has signed off on taking on billions in new debt as part of an unprecedented package totaling more than 750 billion euros ($800 billion) to cushion the fallout from the coronavirus pandemic.Under a supplementary budget, the government will borrow 156 billion euros to fund additional social spending and direct company aid. Germany has also agreed to set up a 600 billion-euro rescue fond to provide virus-hit companies with loans and guarantees and buy stakes in stricken businesses. The fond consists of 400 billion euros in guarantees, 100 billion euros to bail out companies and 100 billion euros for state-backed loans.Germany did the right thing to “deploy the bazooka,” Economy Minister Peter Altmaier said at a press conference in Berlin.Chancellor Angela Merkel’s cabinet signed off on the spending plan in an emergency meeting on Monday. The German leader was forced to chair the gathering via video conference after quarantining herself at home on Sunday following earlier contact with a doctor who later tested positive, taking her out of the public eye just as she asserts herself into the crisis.As the devastating implications of the disease become clear, Merkel’s ruling coalition is abandoning a long-standing commitment to balanced budgets and using emergency powers to suspend rules restricting borrowing that are enshrined in the constitution. The economy could shrink by at least 5% this year, according to an estimate by the finance ministry.In addition to the 156 billion euros in government debt, the rescue fund could issue up to 200 billion euros in additional debt if needed. The ultimate size of the rescue fund’s borrowings depends on how many companies ask for government help, according to Deputy Finance Minister Joerg Kukies.The 156 billion euros in new debt, equivalent to about 4.5% of gross domestic product, is part of a supplementary budget that will be presented to the lower house of parliament on Wednesday and could move on to Germany’s upper house on Friday.A government initiative to lend firms about 500 billion euros via state-owned development bank KfW kicked off on Monday as aid programs start getting rolled out.“It’s all about helping businesses quickly and unbureaucratically,” Altmaier said in a statement. “A large part of that is providing liquidity.”(Updates with details beginning in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.