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Europe

Germany Struggling with Deficit Promise

German Finance Minister Hans Eichel said in an interview that Berlin is struggling to make good on its promise to European leaders to reduce its budget deficit by 2005 and honor the Stability and Growth Pact.

German Finance Minister Hans Eichel admitted on Monday that Germany is struggling to fulfil its promise to European leaders to reduce its budget deficit in 2005 in order to meet the European Union’s Stability and Growth Pact. It would be a "difficult task" for Berlin to keep the promise that Germany would comply in 2005 with the stability pact rules, Mr Eichel said according to the Financial Times. Germany has broken the rules underpinning the euro three years in a row, but still escaped disciplinary sanctions last month by saying that it would fix its budget deficit in 2005 so that it doesn’t exceed the pact’s stipulated ceiling of 3 percent of GDP. But the latest comments by the German finance minister are expected to provoke further criticism from Brussels and other EU capitals. Reducing the budget deficit below three per cent in 2005 "is without doubt a difficult task. However, the promise [to the EU] stands," Mr Eichel said in an interview with German daily Die Welt. The Financial Times reported that a series of tax measures adopted last week by the German parliament would make it even more difficult for Berlin to reduce its budget deficit in 2005. (EUobserver.com)