Budget deficit
June 24, 2009
Steinbrueck said Europe's largest economy, battling to emerge form its steepest recession in 60 years, is faced with "mammoth task."
There is no alternative to the higher borrowings, Steinbrueck told the German newspaper Tagesspiegel, ahead of signing off on his draft 2010 budget.
The draft budget forsees new credit totaling 86 billion euros, the biggest ever in German post-war history. This figure could increase to more than 100 billion euros due to additional costs for a plan to bail out troubled banks.
For the current financial year, new credits have been allocated totaling nearly 48 billion euros - also a record. The budget will be the first responsibility of the new administration following September's parliamentary election.
In an interveiw with the Frankfurt Allgemeine Zeitung newsapepr, Steinbrueck also forecast that Germany will not be able to adhere to the EU's strict Maarstricht Stability Pact budgetary criteria for the current year. He projected it would first happen in a few years.
According to EU rules, member state budget deficits are not allowed to breach 3 percent of gross domestic product (GDP), while a country's public debt is not permitted to exceed 60 percent of GDP.
"On the basis of current economic forecast we will first reach the upper limit of the the Stability Pact by 2013 or 2014," Steinbrueck told the FAZ.
The Social Democrat politician ruled out an extra tax to combat the financial crisis, which he said did not make sense economically. He also rejected raising value-added tax, which was raised to its current level of 19 percent in 2005.
Steinbruek was cautious over the chances of reducing new debt: "It would definitely be a success if we reduced borrowing by 2013 by 40 billion euros," he said "that’s my aim."
No data has been released about plans to top up the Berlin government's economic stimulus plan and bank bailout package.
nrt/dpa/AP
Editor: Jennifer Abramson