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To: yard_man who wrote (6213)	5/12/2004 12:17:09 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Buba's Weber urges govt to cut spending, bring deficit below 3 pct of GDP Wednesday, May 12, 2004 3:16:39 PM FRANKFURT (AFX) - New Bundesbank president Axel Weber urged the government to cut spending and push ahead with key reforms to prioritise bringing the public deficit below the 3-pct-of-GDP limit set by the EU stability and growth pact In his first official speech as Bundesbank president, Weber criticised the government for insufficient discipline in its fiscal policy "Today's budget gaps would be significantly smaller had the government estimated its revenues more conservatively and pursued its expenditure consolidation targets more rigorously," Weber said at a ceremony attended by Finance Minister Hans Eichel to mark his appointment to the Bundesbank helm He said some reform initiatives have failed because government and opposition could not reach a consensus "In the interests of our country I appeal to those who carry the political responsibility to urgently agree on the cornerstones for a sustainable consolidation strategy," Weber said "German fiscal and economic policy must face up to the challenge of quickly dismantling the high deficits, improving conditions for economic growth through sustainable reforms and preparing social security systems for future burdens." The most pressing fiscal issue is to reduce the public deficit below 3 pct of GDP in 2005, Weber said "Here, potential is above all to be found in government expenditure, which is too high," he said Germany's deficit will breach the stability pact's 3 pct limit for the third time in succession this year, and Eichel has conceded it may notch a fourth breach in 2005 The government is reportedly facing a shortfall of 18 bln eur in this year's budget, which comes on top of 29 bln in new borrowing already planned Budgeted new borrowing of 21 bln eur in 2005 could blow out to 36 bln under new finance ministry estimates, German newspapers reported last week. Weber said the government should transfer spending from areas of pure consumption to those that offer an investment in the future and would help to balance the budget He said the stability and growth pact should serve as a guide for the government in its fiscal planning "The pact should provide for solid public finances in the EU. It is not (doing so) at the moment. This does not require any changes to the pact, but rather to the will of all member states to abide by the agreed rules," he said fxstreet.com