Nov. 2 (Bloomberg) -- The German government plans a two-year program of investments and incentives to provide a 50 billion- euro ($64-billion) boost to the economy, wracked by a freeze in global credit markets.

``Measures to safeguard companies' financing and liquidity are provided by funding investments worth slightly more than 20 billion euros,'' according to a joint paper by the economy and finance ministries obtained by Bloomberg News. They ``will encourage investments and orders by companies, private households and municipalities totaling about 50 billion euros.''

Chancellor Angela Merkel said yesterday the government will enact ``broad'' measures to bolster the economy. The government has so far been divided on whether to offer tax cuts or boost spending and the Cabinet will discuss the package on Nov. 5. Germany last month slashed its growth forecast for 2009 to 0.2 percent, compared with a 1.7 percent estimate for this year.

The paper, dated Oct. 31, suggests the government is seeking to fund measures with increased borrowing and ``accept cyclical revenue shortfalls or higher expenditures to the full extent.'' The government will fail to meet its target of balancing the federal budget by 2011 because of the ``changed economic environment,'' the document said.

Economy Minister Michael Glos, a member of Merkel's Bavarian sister party, the Christian Social Union, favors tax cuts to spur growth. Social Democratic Party Finance Minister Peer Steinbrueck has rejected the need for a ``broad'' stimulus package.

Disagreement

``A broad-based, economic stimulus program financed through debt would only burn taxpayers' money,'' Steinbrueck said last week. ``After a couple of years, at the latest, middle-income people would have to pay for it through higher taxes.''

Proposed measures include a two-year tax break on purchases of cars with lower-than-normal carbon-dioxide emissions, greater tax relief on household repairs and funds for improving the energy efficiency of buildings, according to the document.

The Cabinet already agreed to a cut in unemployment- insurance contributions, the provision of subsidized loans to stimulate private-sector investment, and a higher tax-free allowance for parents, Steinbrueck said last week. Increased housing subsidies for low earners and tax deductions from health- insurance contributions were also agreed, he said.

To contact the reporter on this story: Christian Vits in Frankfurt cvits@bloomberg.net; Brian Parkin in Berlin at bparkin@bloomberg.net.

Last Updated: November 2, 2008 07:29 EST