The German government repeated on Sunday it would refrain from new spending cuts as a magazine reported that Berlin now sees its 2005 deficit at 3.3 percent of GDP, exceeding EU limits for the fourth year in a row.
The finance ministry dismissed as speculation a report in Der Spiegel magazine that it had set a new borrowing target of 24 billion euros ($28.32 billion) for 2005 and no longer expected to meet EU budget criteria following weak tax revenue estimates.
A spokesman called the report the "usual creative speculation" and said the government had only just begun discussing the 2005 budget.
The size of the deficit would only become clear on June 23 when the cabinet agreed on the draft budget, the spokesman said.
New estimates released last Thursday showed federal tax revenues this year would be 8.3 billion euros below a previous projection, and the 2005 shortfall would be 9.3 billion euros.
The government, trailing the opposition in opinion polls and under intense pressure to boost economic growth ahead of a string of regional elections, has said it would not respond to the new shortfall by raising taxes or cutting expenditure.
Those comments signalled it was ready to breach the EU Stability Pact's deficit ceiling of three percent of GDP in 2005.
Chancellor Gerhard Schroeder last week called for a revamp of the Pact and said the three percent criterion shouldn't be the only one by which to judge a country's fiscal discipline.
News of the new budget gap had prompted renewed speculation that Finance Minister Eichel, whose standing in the government and among voters has plummeted, would resign or be dismissed.
Meanwhile, in a move that could help the government, Bavarian premier Edmund Stoiber, a powerful member of the opposition conservatives, said he would no longer rule out agreeing to cuts in subsidies for homeowners and commuters.
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