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Germany to owe less debt than expected: budget officials

06-23-2010 14:06 BJT

BERLIN, June 22 (Xinhua) -- The German government would face a lower deficit in next two years and borrow less money than expected, as the country has a rebounding economy and higher tax revenues, German newspapers reported Tuesday.

German well-known daily Sddeutsche Zeitung and Bild both quoted government budget officials as saying that the German government is expected to borrow 20 billion euros (25 billion dollars) less for its federal budget this year, and the deficit could be around 60 billion to 65 billion euros.

The government earlier predicted that the federal budget deficit would total 86 billion euros this year, accounting for nearly 6 percent of the gross domestic production (GDP).

German budget officials said that the country's economy has regained vigor since March after a long, cold winter, with exports rising sharply and labor market cost staying low, therefore the corporate tax revenues were much higher than expected.

Moreover, the added income from the auction of fourth generation mobile phone network licenses to telecommunication giants also offset some planned borrowing.

In 2011, Germany's net borrowing on federal level would be reduced to 55 billion euros, far below previous projections of nearly 72 billion euros, officials said.

Although the saving pressure seemed to be eased due to robust exports and economic recovery, German Chancellor Angela Merkel insisted that her country, Europe's biggest economy, should firmly take on austerity measures.

"If we do not achieve a sustainable path toward economic growth, but once again generate bloated growth, we will pay for it with another crisis," Merkel told reporters Monday after a meeting to prepare Germany's position on the G20 summit in Canada later this week.

The coalition government planed to cut 80 billion euros in budget over the next four years, Germany's largest spending cuts projects since World War Two, raising fear of dragging down global economic recovery.

U.S. President Barack Obama released a letter on Friday, one week before the G20 summit, saying that public deficits should be addressed "in the medium term" and world powers "cannot falter or lose strength now" by slashing government spending too quickly and too hard.

Editor:Du Xiaodan |Source: Xinhua

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