October 14, 2007	Sunday	Shawwal 1, 1428

BERLIN, Oct 13: Germany said on Saturday it plans to cut net new borrowing this year and delay some privatisations due to unexpectedly strong tax revenues, as a magazine reported the government would also raise its 2007 growth forecast.

The Finance Ministry said its new borrowing for 2007 will be just over 14 billion euros, well below the originally planned 19.6 billion euros.

“The new borrowing in 2007 will be slightly above 14 billion euros,” a spokesman for the Finance Ministry said ahead of a cabinet meeting next week to discuss a supplementary budget for 2007.

He added the government would use income from unexpectedly strong tax revenues taken in this year to limit the new borrowing -- and to push back planned privatisations at a later day.

The supplementary budget is needed because of a large increase in spending for childcare. The adjusted level for new borrowing will be included in the new budget.

The main reason for the reduction in new borrowing is stronger than expected economic growth this year, which has led to increased tax revenues.

The Finance Ministry has said the government can count on two billion euros more in tax revenues this year than the sum forecast at the last tax estimate made in May.

Der Spiegel reported the government is planning to raise its forecast for 2007 gross domestic product (GDP) growth to 2.5 per cent from 2.3 per cent but lower its 2008 target.

The magazine said that booming export demand and an especially strong third quarter are responsible for the upward revision for 2007.

It said that the forecast had been agreed by the Economy, Finance and Labour ministries. The government will formally announce any forecast revision at the end of October.

The magazine said the government would revise down the 2008 growth forecast towards 2 percent from a previous 2.4 percent.

The downward revision for next year is due to the effects of the U.S. subprime turmoil and the strong euro, it said.—Reuters