German to slash public debt

The German Finance Ministry said Wednesday it would aim to bring down overall public debt to 61.5 percent of the country's gross domestic product (GDP) by 2019 - a level approaching the 60 percent ratio required under the EU's Stability Pact.

Germany's debt ratio has long exceeded that ceiling, reaching a record 80.3 percent in 2010. Currently, the country owes about 2.19 trillion euros ($2.33 trillion) to its creditors - about 74 percent of German GDP.

By comparison, Greece had a debt-to-GDP level of 174 percent at the end of last year, while Italy and Portugal came in second and third in the eurozone ranking with about 131 percent each.

The ministry in Berlin unveiled a five-year debt reduction plan, called the stability program, under which the debt ratio will gradually be reduced to 71.5 percent this year, 68.75 percent in 2016, 66.0 percent in 2017, 63.75 percent in 2018 and finally 61.5 percent in 2019.

Surpluses make it possible

Over that period, Berlin hopes to achieve annual budget surpluses to support its effort. After securing its first surplus since 1969 last year, with a plus of 0.6 percent, the government has penciled in 0.25 percent for 2015. In 2016, it wants to reach a balanced budget, with modest surpluses of between 0.25 percent and 0.5 percent expected for the following years until 2019.

The Finance Ministry said in a statement that Germany's "solid budget policy" would make a "substantial contribution" to reaching the EU's budget goal.

"The German economy is robust, growth is above trend and employment will this year reach a new record with more than 42.8 million people in work," the ministry added.

Germany, the economic powerhouse of Europe, has fared much better than its neighbors during the long economic and financial crisis. Unemployment is comparatively low and economic growth remained in positive territory for most of the past 7 years.

uhe/sgb (AFP, Reuters, German Finance Ministry)