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Germany mulls abandoning balanced budget goal due to refugee crisis: report

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The German government is discussing whether to abandon its goal of achieving a balanced budget due to the rising costs of coping with a record influx of refugees, German newspaper Handelsblatt reported.

[BERLIN] The German government is discussing whether to abandon its goal of achieving a balanced budget due to the rising costs of coping with a record influx of refugees, German newspaper Handelsblatt reported.

The business daily said politicians with budgetary expertise in the ruling coalition - comprised of Chancellor Angela Merkel's conservatives and the centre-left Social Democrats (SPD) - expected the government to spend around 10 billion euros (S$15.3b) on dealing with the refugee crisis in 2016 compared with the nearly 7 billion that had previously been expected.

Germany achieved a balanced budget for the first time since 1969 in 2014 - a year earlier than planned - and the coalition has promised to balance the budget from this year through 2019.

But, in an advance copy of an article due to be published on Thursday, Handelsblatt said there were currently discussions in the government about whether it was sensible to insist on achieving a balanced budget in 2016.

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The finance ministry was not immediately available to comment.

Earlier on Wednesday, when asked whether the goal of a balanced budget was setting limits to aid for refugees, German Finance Minister Wolfgang Schaeuble said: "Of course we won't say to a refugee drowning in the Mediterranean 'Man, we've run out of money!'"

He also said German aid for refugees would not fail due to financial issues, referring to the balanced budget. "We have the means in Germany to deal with the challenge," he said, adding that the refugee crisis was currently the biggest task and "other things have to subordinate themselves to that to some extent".

Mr Schaeuble is due to present tax estimates next week and Handelsblatt said he would at that point announce whether he would stick to the balanced budget goal for 2016.

It cited sources in the finance ministry as saying that giving that goal up now would be like bursting a dam from a budgetary point of view and that it was likely the balanced budget would remain for the time being, partly because tax revenues are expected to rise next year and interest expenditure is expected to be lower than previously thought.

REUTERS

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