Borrowing Despite Boom

A concept paper from the German finance ministry foresees that new debt will fall from 19.6 billion euros ($25.8 billion) in 2007 to 18 billion euros in 2008. But the government will still borrow more than 10 billion euros in 2011.

According to ministry officials, reforms to Germany's health sector and an increase in development aid are responsible, German newsmagazine Der Spiegel reported on its Web site Saturday.

German Chancellor Angela Merkel has invited Finance Minister Peer Steinbrück, Labor Minister Franz Müntefering and Economics Minister Michael Glos to a meeting on March 23 to discuss the situation and talk about how Germany will be able to lower the state deficit to zero by 2011, as required by the EU.

The German economy grew 0.9 per cent in the final quarter of last year, with government revenue rising faster than expected. European Union guidelines call on governments to use the "fat" years to pay off debt.

Last year, Germany's state deficit declined to just 1.7 per cent of gross domestic product, after hovering above the EU's 3-per-cent rule during 2002-05.