No action on German budget deficit until February

11th January 2006, Comments 0 comments

11 January 2006, BRUSSELS - The European Union's top monetary official Wednesday said he was delaying further action on Germany's excessive budget deficit until February, allowing more time for consultations with Berlin. E.U. monetary affairs chief Joaquin Almunia told reporters he expected to scrutinise Germany's efforts to slash its budget deficit in early February, with a decision on the issue set for February 22. Almunia had earlier said he would act on the German budget in January. The new German coal

11 January 2006

BRUSSELS - The European Union's top monetary official Wednesday said he was delaying further action on Germany's excessive budget deficit until February, allowing more time for consultations with Berlin.

E.U. monetary affairs chief Joaquin Almunia told reporters he expected to scrutinise Germany's efforts to slash its budget deficit in early February, with a decision on the issue set for February 22. Almunia had earlier said he would act on the German budget in January.

The new German coalition government had asked for more time for consultations with the European Commission, Almunia told reporters.

Almunia said his preliminary assessment of Berlin's economic programme was "positive", but added that he was waiting for more details from Berlin.

German Finance Minister Peer Steinbrueck had shown a "real willingness to consolidate public finances" and promised a reduction of Germany's excessive budget deficit by 2007, Almunia told reporters.

However, a final Commission assessment of Berlin's finances as well as a decision on further action would be taken on February 22, followed by consultations with other European Union finance ministers in March, he said.

The E.U. executive said last year that it expected the German budget deficit in 2005 to be "even higher" than the 3.7 per cent of Gross Domestic Product (GDP) forecast by the country's authorities.

This is the fourth successive year that Berlin will be in breach of eurozone fiscal rules, which set a 3 per cent of GDP ceiling for national budget deficits. Many analysts predict a further overshoot next year.

The 3-per-cent rule has also been broken by France, Italy and several other key euro zone economies.

Asked to comment on a new 25-billion-euro German government economic blueprint, Almunia said it was a mix of efforts to increase public spending and taxes in some sectors while reducing some expenditure.

Berlin, as well as other nations in breach of the eurozone rules have escaped sanctions, despite earlier demands for such punitive fines from the European Commission.

DPA

Subject: German news

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