Eichel predicts record 2004 deficit
30 September 2004 , BERLIN - German Finance Minister Hans Eichel told parliament Thursday he now expected the federal government to show a record net new debt of EUR 43.7 billion this year and will have to submit a supplementary budget bill.
30 September 2004
BERLIN - German Finance Minister Hans Eichel told parliament Thursday he now expected the federal government to show a record net new debt of EUR 43.7 billion this year and will have to submit a supplementary budget bill.
Eichel cited lower-than-anticipated tax revenues, particularly for tobacco and petroleum products, for the higher spending deficit.
A supplementary budget proposal for 2004 will be presented to the Social Democrat-Greens cabinet next week, Eichel said.
The finance minister said that Germany is now emerging from three years of economic stagnation, but the rise has so far been carried by export performance. The effects on the job market were still lagging behind, he said.
Opposition deputies sharply attacked the finance minister, with Free Democrat deputy Carl-Ludwig Thiele describing the new debt figure as "irresponsible" and accusing Berlin of a policy of "trickery and deceit".
The current record new borrowing figure was EUR 40 billion in 1996 under the previous conservative-liberal coalition government.
Last year, Germany's federal debt rose by EUR 38.6 billion.
Berlin had entered 2004 with Eichel forecasting net borrowing of EUR 29.3 billion. But by mid-year, the Finance Ministry was saying the figure might go EUR 10 to 11 billion higher, or just over EUR 40 billion.
More recently, Eichel spoke of the deficit going as much as EUR four billion higher due mainly to lower tax revenues on tobacco and petrol and lower proceeds from a tax amnesty programme. In addition, money for more than 4 million jobless were adding to Berlin's costs.
Subject: German news