BERLIN: The German government is aiming to cut net new borrowing to just 6.4 billion euros in 2014, the lowest amount in 40 years, and get by without incurring any new debt the following year, a finance ministry official said on Monday.
The borrowing plans, due to be approved by Chancellor Angela Merkel's cabinet on Wednesday, underscore just how strong Germany's finances are compared to those of its European partners three years after the outbreak of the euro zone crisis.
The official, who requested anonymity because the figures are not due to be formally approved until Wednesday, said the plans foresee a budget surplus of 5 billion euros in 2016 and of 9.4 billion euros in 2017.
As Germany has been seen as a safe haven in the crisis, its interest rates have sunk to record lows, making it far cheaper for the government to borrow and padding its coffers.
Europe's largest economy will therefore be able to cut its interest expenses by 4 billion euros to 31 billion euros next year, the official said.
Germany expects the Bundesbank central bank to feed 2 billion euros of profit into the country's budget next year, up from an expected 1.5 billion euros this year.
Germany's centre-right coalition has kept spending at around 300 billion euros since the start of its term in 2009 and in 2014 plans to cut spending by 1.7 percent on the year to 296.9 billion euros.
Unemployment is hovering near a post-reunification low, which has boosted income tax take for Berlin.
After decades of taking on new debt, Germany has 1.3 trillion euros of debt, equivalent to 80 percent of its gross domestic product (GDP), putting it above the EU-tolerated ceiling of 60 percent of GDP.
"From 2015 on we want to start clearing our debt," said Otto Fricke, budget expert for the Free Democrats (FDP), Chancellor Angela Merkel's junior coalition partners.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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