HELSINKI (AFX) - EU economic and monetary affairs commissioner Joaquin Almunia said Germany is doing what is required to correct its excessive fiscal deficit, but that it must press on with efforts to improve its public finances in the years ahead.
'We consider that at the present moment no further steps are needed for the correction of the excessive deficit, that the situation is developing according to our demands and according to the recommendations adopted by the council,' he told a news conference at the end of a meeting of EU finance ministers and central bank governors.
German Finance Minister Peer Steinbrueck recently said that the country expects to post a deficit of 2.8 pct of GDP this year, which will mean that it will meet the EU stability pact target of a deficit below 3 pct of GDP for the first time since 2001.
'With the latest information that we have and with the information that minister Steinbrueck has given to us about the expectations on the reduction of the excessive deficit in Germany even this year below 3 pct, we are more optimistic than we were two months ago,' said Almunia.
But he said the acceleration of economic growth should be used to step up deficit reduction efforts in Germany and other euro zone countries.
'We are now in good times, we are (having) a very good start to the economic recovery in the euro area. This is particularly the case in Germany. And this is the time for defining and adopting more ambitious targets for fiscal consolidation,' he said.
European Central Bank president Jean-Claude Trichet and Ecofin chairman Eero Heinaluoma, the Finnish finance minister, both said that governments have previously made the mistake of not stepping up deficit reduction efforts at the top of the economic cycle and that this mistake must be avoided now.
'The question is not only to correct the excessive deficits and get the deficit below 3 pct, but the question is to how to continue these efforts to put public finances in a sustainable position in the medium and long term,' said Almunia.
He said deficit reduction must be structural and warned that the commission will want to check that Germany has succeeded in cutting its deficit on a structural basis, rather than relying on one-off measures.
'In the recommendations of the council there were targets for a structural correction of excessive deficits in Germany in 2006 and 2007 and we will look into the amount of the structural efforts which have been done in Germany when we publish forecasts in November, once we have received notification of the figures for this year,' he said. steve.whitehouse@afxnews.com sw/vm COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited