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BRUSSELS, March 2: The European Commission and Germany reached agreement on state guarantees for German special credit institutions in a deal which will stop such institutions using state support to finance any commercial activities.
Friday’s accord supplements one reached a day earlier on ways to assure that state guarantees to German Landesbanken and savings banks are compatible with the Commission’s stringent state aid rules.
Germany may provide state guarantee to special credit institutions for public promotional business, such as financing of small and medium-sized firms, investment for environmental protection, housing, and cooperation with developing countries.
Activities which fall outside the areas in line with the state aid rules, must be either discontinued by the special credit institutions or hived off to legally independent subsidiaries without state support, a press statement said.
The promotional tasks which German special credit institutions can perform while receiving state support must be set out by law. The deadline to draw up such laws is the end of March 2004.
These institutions will then have until the end of 2007 to hive off any activities which do not qualify as public promotional business.
BERLIN: The German finance ministry rejected reports on Saturday that Finance Minister Hans Eichel would have to plug further budgetary shortfalls
of up to eight billion euros next year.
Citing Eichel’s budgetary adviser Manfred Overhaus, Focus magazine said the government was estimating tax revenue shortfalls of up eight billion euros for next year and could see up to four billion euros less in tax revenues this year.
I can only reject this report as pure speculation, a ministry spokesman said on Saturday.
Eichel is currently preparing the 2003 budget but the spokesman said no comprehensive estimates on tax revenues next year had been compiled yet and would not be available until tax estimates were released in May.
Eichel has promised to achieve a budget close to balance by 2004, after the European Union threatened a formal reprimand over Germany’s rising budget deficit, which reached 2.6 per cent of gross domestic product last year.
The spokesman said that Eichel had called a meeting for March 21 of the financial planning council, which is composed of finance ministers from the regional states and experts from local authorities.
This council would discuss a national stability pact and formulate concrete goals for saving money, he said.
Focus said the government planned to make further cutbacks in the labour, defence and transport ministries.
Spiegel magazine reported that efforts to trim government spending could set the government on a collision course with the Social Democrats parliamentary party.—Reuters
