Lawmakers in Germany’s lower house of parliament today backed a supplementary budget proposed by Finance Minister Wolfgang Schaeuble to lower the federal borrowing target by about 8 percent.
The target was reduced to about 32 billion euros ($40 billion) from 34.8 billion euros, according to the Heute im Bundestag official parliamentary newsletter.
“It is pleasing that net new borrowing this year will fall to 32.1 billion euros,” Norbert Barthle, the budget spokesman in Chancellor Angela Merkel’s party caucus, said in an e-mailed statement, citing lower borrowing costs for the government and favorable labor-market developments as reasons for the drop.
The supplementary budget became necessary because Germany has to pay 8.7 billion euros in capital into the euro region’s permanent rescue fund, the European Stability Mechanism, that hadn’t initially been budgeted for this year. European leaders agreed in December that the ESM should start operating in July, instead of the summer of 2013, in an effort to tame the sovereign debt crisis.
The Bundesbank and Germany’s Federal Accounting Office have urged Schaeuble to reduce borrowing more quickly than planned. Barthle said Germany’s federal government will meet the targets of the country’s constitutional debt brake two years ahead of time in 2014, calling on the 16 states to meet their obligations as well.
“The balanced budget is within sight,” Barthle said.
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