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To: Haim R. Branisteanu who wrote (175564)	6/26/2002 11:36:01 AM
From: Haim R. Branisteanu	Respond to of 436258

UPDATE 1-German tax revenue rises, but so does spending June 26, 2002 03:51 AM ET Email this article Printer friendly version (recasts, adds more details) BERLIN, June 26 (Reuters) - German tax revenue rose 1.6 percent year-on-year May, the first annual increase this year, the finance ministry said on Wednesday in its monthly report. But the data showed revenue was still down sharply in the year to date, and spending on social security, like unemployment benefit, was up, underlining the difficulties Germany may face this year to meet its budget goals. Federal government tax revenues rose 1.7 percent in May, but in the year so far were down 4.1 percent, the report showed. In addition, spending was up 3.2 percent, led by a 12.5 percent increase in unemployment benefit. The report said for the January to May period the federal government's budget hole was 30.9 billion euros compared with a projected deficit for the year of 23.7 billion euros. The finance ministry insisted this figure was a snapshot of the year-to-date performance and no conclusions could be drawn about likely developments in the rest of the year. The government has said it hopes Germany's total public sector deficit this year will fall to "around 2.5 percent" of gross domestic product (GDP) from 2.7 percent of GDP in 2001. The report repeated the government's view that Germany's economy is now recovering after a mild recession last winter. On Tuesday the ministry said it expected the upturn to lift tax revenues in the second half of the year. The federal budget accounts for less than half total spending, meaning the deficit will depend much on budgetary developments in Germany's regions and local authorities. The regions' cumulative deficit in the year to April was 17.4 billion euros, the ministry said, but also insisted this figure could not be extrapolated to give an accurate estimate of the full year figure. (Berlin newsroom, tel. +49 30 2888 5210))