German budget to be in balance in ’08

BERLIN – Germany will probably balance its public-sector budget in 2008, one year earlier than expected by the finance ministry, due to surging tax income, a top conservative budget policymaker said yesterday.

According to the finance ministry’s latest finance plan published on Sunday, the public-sector deficit – federal, state and local authority finances and the social security system – is expected to narrow to 0,5 per cent of gross domestic product (GDP) this year. Ministry officials expect the deficit to remain at that level next year, but Steffen Kampeter, spokesman on budget policy for Chancellor Angela Merkel’s ruling conservatives, told reporters he expected state finances to be in balance.Net new borrowing by the federal government would be much less than the targeted 19,6 billion euros (N$186,2 billion) this year, probably “between 13 and 15 billion euros,” he said.Finance Minister Peer Steinbrueck has enjoyed a tax income windfall after Europe’s biggest economy grew at its strongest in six years last year, helping him to push forward swiftly with a programme of budget consolidation.A government commission has estimated that public-sector tax revenue will be almost 180 billion euros more than expected through 2010.The finance ministry’s latest finance plan, due to be signed off in cabinet on Wednesday, foresees federal net new borrowing shrinking to 12,9 billion euros next year and a balanced budget by 2011 for the first time in four decades.The ministry has said new borrowing for 2007 is set to significantly undershoot the planned 19,6 billion euros after 27,9 billion euros last year.By how much will depend on the amount of extra cash set aside for childcare benefits and whether the government goes ahead with privatisations planned for this year.Nampa-ReutersMinistry officials expect the deficit to remain at that level next year, but Steffen Kampeter, spokesman on budget policy for Chancellor Angela Merkel’s ruling conservatives, told reporters he expected state finances to be in balance.Net new borrowing by the federal government would be much less than the targeted 19,6 billion euros (N$186,2 billion) this year, probably “between 13 and 15 billion euros,” he said.Finance Minister Peer Steinbrueck has enjoyed a tax income windfall after Europe’s biggest economy grew at its strongest in six years last year, helping him to push forward swiftly with a programme of budget consolidation.A government commission has estimated that public-sector tax revenue will be almost 180 billion euros more than expected through 2010.The finance ministry’s latest finance plan, due to be signed off in cabinet on Wednesday, foresees federal net new borrowing shrinking to 12,9 billion euros next year and a balanced budget by 2011 for the first time in four decades.The ministry has said new borrowing for 2007 is set to significantly undershoot the planned 19,6 billion euros after 27,9 billion euros last year.By how much will depend on the amount of extra cash set aside for childcare benefits and whether the government goes ahead with privatisations planned for this year.Nampa-Reuters