The German government expects to cut new borrowing to 22 billion euros in 2005 with the help of privatisation earnings but spending will rise slightly to 258.3 billion euros, according to a draft budget obtained by Reuters.
The federal government expects its tax income to total 194.5 billion euros ($235 billion), down from 197.7 billion euros in 2004, but other income, including privatisation, will rise to 41.8 billion euros from 30.3 billion, according to the draft obtained on Sunday.
The planned new 2005 borrowing at 22 billion euros is not only below the 29.3 billion planned for 2004 but also lower than the amount earmarked for investment - 22.8 billion euros.
New borrowing must be below new investment to make the budget conform with the constitution.
Chancellor Gerhard Schroeder's cabinet will review the budget on Wednesday before sending it to parliament.
Finance Minister Hans Eichel has expressed confidence that Germany's federal, state and local governments can bring the country's budget deficit back in line with European Union rules in 2005 - to be no more than three percent of gross domestic product.
Germany's budget deficit - the sum of shortfalls at various levels of government - has exceeded that EU limit for two years, as the economy has stalled, eating into tax revenues and pushing up spending on social welfare programmes.
In the draft, the Finance Ministry said that it was able to reduce 2005 new borrowing to the 22 billion euro level from the expected new borrowing requirement of 29.3 billion euros in 2004, largely due to income from privatisation.
"Despite numerous burdens, the new borrowing in 2005 has been successfully reduced to an amount considerably below the new borrowing of the previous year (29.3 billion euros)," the draft said.
"Earnings from privatisation amounting to 15.45 billion euros account for much of this. In the overall financial planning for the time period, the new borrowing amounts are lower than the investment amounts."
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