Brussels, 25/09/2002 (Agence Europe) - The German government has revised estimates for this year's budget deficit upwards. Instead of the 2.5% estimate previously given, it now stands at 2.9%. On Wednesday a spokesman for the Finance Ministry declared that the government was still striving to achieve a balance in its public finances by 2004. The spokesman for the German Ministry of Finance also pointed out that the commitment to reach a balance in public spending by 2004 was subject to the 2.5% growth in 2003 and 2004. "If we do not achieve this growth, then it appears logical that our goals (regarding deficit reduction) will not be reached", he acknowledged.
Due to the weakness of growth in Germany, many experts have already estimated that the public deficit in the largest economy in the Euro-zone would be higher this year than the anticipated 2.5% forecast up until now. Some pundits are even quoting a figure of 3.7% for this year given that the recovery is so late in coming. The German Central Bank declared this week that there was "increased risk" of Germany exceeding the 3% of GDP deficit limit, which would mean it receiving a formal ticking off (for having an excessive deficit) from the Commission after having closely escaped one at the beginning of the year and entered into preventative warning proceedings instead. Commissioner Pedro Solbes has written in a note discussed during the Commission meeting that the deficit "could exceed" the 3% limit this year.
France confirmed that its deficit could reach 2.6% in 2002 the same as in 2001. The public deficit in Italy will be around 2% of GDP in 2002, whereas it initially provided the Commission with an estimate of 1.3%. The government has already said that it intended to balance its spending between 2004-2005. For Portugal, the Commission began the first stage of a procedure for excessive deficits focusing on the year 2001 (see EUROPE yesterday p 7). Despite the deficit of 4.1% in 2001, Portugal is still hoping to bring this figure down to less than 3% this year.