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To: Haim R. Branisteanu who wrote (44676)	5/10/2003 2:16:22 PM
From: Haim R. Branisteanu	Respond to of 52237

Eichel Says German 2003 Borrowing Will Rise, Drops Budget Goal By Hellmuth Tromm Berlin, May 10 (Bloomberg) -- German Finance Minister Hans Eichel said the government needs to borrow more this year than it planned, and has dropped its goal of balancing the budget by 2006. The 18.9 billion euros ($21.7 billion) in new borrowing planned so far ``wont' be nearly enough'' to plug budget holes caused by increased spending on unemployment benefits, Eichel told German weekly magazine Der Spiegel in an interview. Finance Ministry spokesman Joerg Mueller confirmed his comments. The budget gap will overshoot the European Union deficit ceiling of 3 percent of gross domestic product, a limit designed to protect the euro, for a second year in a row as the economy is near recession, Eichel said. He didn't say how much extra money the government will borrow in 2003. Eichel made achieving a balanced budget his top priority when taking office four years ago, citing the government's responsibility to future generations. After September's election, he pushed back the target date by two years to 2006 from 2004. The failure to meet the target will be announced at a press conference on Thursday after the publication of tax revenue estimates, Mueller said. Eichel won't give a new target year, he said. ``We won't be able to make it in 2006 unless an economic miracle happens,'' Eichel said. ``It's a bitter defeat.'' Europe's largest economy has barely grown since shrinking in the last two quarters of 2001, prompting tax revenue to fall. Unemployment rose in April to its highest in more than five years, adding to the cost of welfare benefits. Spending on jobless benefits alone will be 10 billion euros more than planned, Eichel said. He announced extra cuts in the 2004 budget and dismissed calls from industry groups for additional tax reductions. ``There are two more tax reform steps scheduled. That'll do for now,'' Eichel said. Last Updated: May 10, 2003 06:31 EDT