Germany's 2010 deficit much lower than expected: ministry

22nd June 2010, Comments 0 comments

Germany needs to borrow billions of euros (dollars) less than it thought this year, the finance ministry said Tuesday, due to a better-than-anticipated upturn in Europe's top economy.

"The federal government is now assuming considerably lower net borrowing in 2010 than projected in the budget and therefore lower structural new borrowing," the ministry said in a statement.

Germany's structural budget deficit -- non-cyclical borrowing -- has been correspondingly slashed to 53.2 billion euros compared to previous estimates of 66.6 billion euros.

The structural deficit is used as a reference for the country's recently introduced "debt brake," which sets a legal limit on new borrowing and seeks an essentially balanced budget by 2016.

The total deficit in 2010 has been slashed by 20 billion euros, the Sueddeutsche Zeitung daily reported earlier Tuesday. The ministry did not provide figures for the total deficit.

Previously, Berlin had expected a total budget deficit of some 80 billion euros.

According to the paper, the positive trend should continue in 2011, with a total deficit of 55 billion euros, compared to a previous forecast of 72 billion euros.

The German government has said it would try to cut at least 80 billion euros from the budget by 2014, including more than 11 billion euros next year.

© 2010 AFP

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