German Lawmakers Set 2004 Deficit

After several weeks of consultations, the budgetary committee of the German parliament has released a draft version of the 2004 budget that aims for a federal deficit of €29.3 billion ($34.3 billion). The figure would cut a third off this year’s record deficit of €43.4 billion ($50.9 billion) by trimming spending and selling €7 billion ($8.2 billion) of the government’s shares in Deutsche Telekom AG and Deutsche Post AG to a state bank. Chancellor Gerhard Schröder’s government is under pressure from the European Union to cut the deficit, which is expected to breach EU rules meant to protect the euro both this year and next. Brussels is expected to review Schröder’s budget and may suggest further ways to cut the spending gap. The German deficit exploded to record levels after the economy fell into a recession in the first half of 2003, which both cut into tax revenue and boosted welfare expenses. The draft 2004 budget anticipates tax revenues of €197.7 billion, investments of €24.6 billion and spending of €257.3 billion.