German borrowing to fall in 2011: agency

16th December 2010, Comments 0 comments

Germany will borrow about 302 billion euros (400 billion dollars) in 2011, down from 312 billion euros in 2010 as it recovers from its worst postwar recession, its finance agency said Thursday.

Germany will thus respect a pledge to reduce borrowing as part of a plan to cut its federal deficit from more than 50 billion euros this year to about 48.4 billion in 2011.

Berlin is working to cut its public deficit, which includes spending by regional and municipal governments and the national health system, to less than three percent of the nation's output, the limit set for European Union members.

The cost of borrowing has risen for Germany as for other advanced economies, in part owing to the Irish debt crisis, and competition between governments and commercial banks for financing on capital markets will increase next year, the European Central Bank has warned.

Germany benefits from its reputation for fiscal discipline however, and the rates on its long-term Bunds serve as the eurozone benchmark.

© 2010 AFP

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