BERLIN (MNI) – Germany does not expect to be criticized at the
upcoming G8 and G20 summits this weekend for its plan to exit from
stimulus measures and start consolidating public budgets next year,
German government officials said Tuesday.

“We don’t expect a controversial discussion” on the matter, one
government source said. “Germany won’t come under pressure.”

The official said German Chancellor Angela Merkel and US President
Barack Obama spoke over the telephone yesterday about the G8 and G20
meetings in Canada.

“In the telephone conversation there was no call [by Obama] for
further growth stimulating measures by Germany,” the official said.
Rather, both leaders agreed on a “differentiated” exit from the crisis
measures, he said.

The German economy is currently growing above its potential growth
rate and, thus, “no further economic stimulus measures are necessary,”
the government official said.

Referring to the upcoming G8 and G20 gatherings, the source said
there is currently a discussion underway about whether the risk of a
renewed economic slump after withdrawing the crisis measures is larger
than the risk of a debt crisis.

Pointing to the recent debt turbulences in Europe, the official
reasoned that “the risk of a debt crisis has to be assessed as being
very high.”

Chancellor Merkel Monday warned that stimulating further growth
through more deficits would lead to another crisis. “We must not make
this mistake again,” she urged.

A finance ministry source said Tuesday that Germany’s economic
stimulus measures had been “back-loaded.” The fiscal stimulus in 2010 is
in effect larger than in 2009, he noted. “In 2011 we will start a
cautious exit,” the official said.

The finance ministry source stressed that Germany must take the
deficit rules in the EU Stability and Growth Pact seriously. “Otherwise,
nobody will,” he warned.

German Finance Minister Wolfgang Schaeuble on Monday called the
government’s budget consolidation plan “measured,” arguing that it would
not hamper economic growth. “We have paid careful attention so that no
growth impulses will be endangered,” he asserted.

German Economics Minister Rainer Bruederle stressed Monday that in
order to assure monetary stability, public budgets needed to return to
balance.

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

[TOPICS: MT$$$$,M$G$$$,M$X$$$,MGX$$$,MFX$$$,MFGBU$,M$I$$$,MGU$$$]