Germany's budget is based on an "extremely conservative" estimate of Bundesbank profits in 2006 and following years, Finance Minister Hans Eichel told Reuters in an interview. The budget plans foresee the central bank transferring 500 million euros a year to the government through 2009 compared with 3.5 billion euros assumed in recent years.
"It's an extremely conservative estimate, something the Bundesbank has also confirmed. It's more likely to be more," Eichel said.
Eichel was criticised by the opposition for presenting last Wednesday a draft 2006 budget that relies on record privatisation and one-off revenues of more than 30 billion euros to keep new borrowing down.
But with a general election possibly only weeks away, the budget may never see the light of day. Formal adoption by the cabinet was postponed, pending more news on the election.
Eichel was forced in both 2003 and 2004 to slash his estimates of Bundesbank profits as the euro appreciated against the dollar and interest rates fell, cutting central bank income.
Both the Greens party, the junior coalition partner, and the central bank itself had urged him to take a more cautious approach in future budgets.
The Bundesbank announced in March a profit of 676 million euros compared with the original hoped-for 3.5 billion euros, a target that was cut to 2 billion euros by the time the budget was finalised last November.
The profit was only possible thanks to a one-off gain of 1.2 billion euros, which offset write downs on the value of its huge foreign currency reserves.
Eichel noted that if the euro had ended 2004 at its current level, he would have garnered more money from the central bank. He declined to speculate on whether the central bank may sell its gold reserves in coming years.
Germany's budget deficit is set to exceed the EU's three percent of gross domestic product (GDP) deficit limit in 2006 for a fifth year in a row, even if the Bundesbank does generate a higher-than-expected profit.
Eichel said Germany's opposition was responsible for the slippage after it used its majority in the Bundesrat upper house to block efforts to curb tax subsidies.
"I'm convinced that the blockade will end after the election, whatever the result," Eichel said, noting 11 out of the 16 states represented in the Bundesrat were likely to break a German constitutional rule.
He was downbeat, however, on the chance of wider reform of Germany's federal financial system.
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