Germany's Schaeuble plays down 55-bn-euro accounting error

2nd November 2011, Comments 0 comments

German Finance Minister Wolfgang Schaeuble Wednesday downplayed an accounting error at a state-owned bank that overstated Germany's debt last year to the tune of 55 billion euros ($76 billion).

The embarrassing error resulted from a "misunderstanding" between the nationalised mortgage lender Hypo Real Estate and the subsidiary which manages its problem assets, FMS Wertmanagement, Schaeuble told a news conference.

At no time did it constitute a risk for German taxpayers and its discovery "does not mean Germany is now richer by a single euro or that it had been poorer beforehand," the minister insisted.

Schaeuble said his ministry learned of the scale of the error only on October 13.

It came to light at a critical time for the eurozone given the backdrop of the current debt crisis, potentially placing a question mark over the reliability of Germany's public accounts.

It apparently arose because changes in the value of collateral held for derivatives were not fully taken into account.

The error was reportedly uncovered in early October and in its half-year accounts, FMS was compelled to correct its balance sheet for 2010 to lower its debt by 24.5 billion euros and will reduce the borrowing figure for 2011 by 31 billion euros.

Because FMS is ultimately owned and guaranteed by the German government, this means the country's overall debt burden is expected to amount to 81.1 percent of gross domestic product (GDP) this year instead of the previously estimated 83.7 percent.

© 2011 AFP

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