–Adds Comments From Fin Min Schaeuble To Story Sent At 08:53 GMT

BERLIN (MNI) – The German government cabinet on Wednesday adopted
the 2012 federal budget bill and the medium-term fiscal outlook up to
2015.

The 2012 draft budget foresees federal net new borrowing of E27.2
billion. In 2011, federal net new borrowing will likely also be around
E30 billion, Finance Minister Wolfgang Schaeuble said at a press
conference here. On Sunday, a senior finance ministry official said
federal net new borrowing this year will be even below E30 billion.

The country’s total public budget deficit is forecast by the
government to fall below 2% of GDP this year. The federal structural
deficit alone will likely fall to 0.35% of GDP already by 2015, one year
ahead of schedule, the minister said. By 2016, the country’s debt
limitation rule doesn’t allow a federal structural deficit above 0.35%.

The 2012 budget bill still must pass both houses of parliament.
Traditionally, parliament lowers federal net new borrowing somewhat
further.

In its medium-term fiscal outlook, the government projects federal
net new borrowing to fall to E24.9 billion in 2013, E18.7 billion in
2014 and E14.7 billion in 2015.

Federal expenditures are projected at E306.0 billion in 2012,
E311.5 billion in 2013, E309.9 billion in 2014 and E315.0 billion in
2015.

Federal tax revenue is tabled at E247.4 billion in 2012, E256.4
billion in 2013, E265.8 billion in 2014 and E275.7 billion in 2015.

Other revenue is seen at E31.5 billion in 2012, E30.2 billion in
2013, E25.4 billion in 2014 and E24.6 billion in 2015. This includes,
for example, proceeds from highway tolls, distributed dividends and the
Bundesbank profit.

The budget projections are based on the government’s current
forecasts of GDP growth of 2.3% this year, 1.8% next year and 1.6% per
year for 2013-2015.

In other remarks, Schaeuble said that Bundesbank President Jens
Weidmann, who attended today’s cabinet meeting, had told the government
that he was confident that the inflation trend would slow in the second
half of the year.

–Berlin bureau: +49-30-22 62 05 80; twidder@marketnews.com

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