The German finance ministry has announced a €2 billion financing deal with a German investment bank to fund a €7.5 billion loan for the country’s public sector, as the country struggles with its second-largest debt in more than three decades.
Germany has been plagued by economic stagnation and public anger at the way the country has been bailed out by the European Union and International Monetary Fund, and the government faces an election in September.
The deal would be the largest bailout in German history.
The finance ministry said on Friday that it had received a letter from the investment bank, Gestadt-Bundesbank, asking it to take the first step towards financing the loan for public sector jobs in Germany.
The ministry said it would have to make the final decision on the loan at a later stage.
Germany’s economy contracted by more than a third in the second quarter, and inflation was at more than 20 percent.
It has been struggling with an economic slowdown that has put a strain on public spending and the economy.
The debt crisis has been the subject of intense debate in Germany, with the Social Democrats and Greens seeking to make Germany the first country in the world to completely privatize its economy.
Gestadt and the German government have both said they would like to see the loan be repaid by 2020.
German Finance Minister Wolfgang Schaeuble said in a news conference on Friday he expected to make a decision on whether to approve the deal within days.
“I am waiting for the German finance ministers’ agreement, and we are confident that the agreement will be approved,” Schaeubel said.