Germany sinks deeper into the red

29th September 2004, Comments 0 comments

29 September 2004 , BERLIN - German Finance Minister Hans Eichel conceded Wednesday that the federal budget will go much deeper into the red in 2004 than previously planned amid lower tax revenues and higher costs to support the country's jobless. Eichel said Berlin may go as deeply as EUR 43 billion in the red. In 2003, the federal debt rose by 38.6 billion euros. The record new debt figure is EUR 40 billion in 1996 under the previous conservative government. Berlin had entered 2004 with a forecast of ne

29 September 2004  

BERLIN - German Finance Minister Hans Eichel conceded Wednesday that the federal budget will go much deeper into the red in 2004 than previously planned amid lower tax revenues and higher costs to support the country's jobless.

Eichel said Berlin may go as deeply as EUR 43 billion in the red.

In 2003, the federal debt rose by 38.6 billion euros. The record new debt figure is EUR 40 billion in 1996 under the previous conservative government.

Berlin had entered 2004 with a forecast of 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.

Now, Eichel said the debts might rise by a further EUR 3 to 4 billion due mainly to lower tax revenues on tobacco and petrol and lower proceeds from a tax amnesty programme. In addition, money for the country's more than 4 million jobless were adding to Berlin's costs.

Eichel said a supplementary budget proposal to cover the new borrowing can only be made after the next tax revenues estimates in November. A parliamentary vote on supplement to the 2004 budget would take place at the same time as voting on the 2005 federal budget.

The political opposition Christian Democratic Union/Christian Social Union reacted to the latest debt figures by charging Eichel with leading Germany into a "budget policy disaster".

The opposition charged that Eichel with a "deliberate deception" in making a pledge that Germany would lower its budget deficit next year to within the 3 percent target set for eurozone member states 

In August, Eichel had reported to the EU Commission that Germany's deficit this year would reach 3.7 percent of the gross domestic product, but would be lowered to below 3 percent in 2005.

DPA

Subject: German news
 

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