IMF Expects Germany To Break Eurozone Rules Until 2010

by Ulrika Lomas, for LawAndTax-News.com, Brussels

23 September 2005

According to the International Monetary Fund (IMF), Germany is likely to break the 3% of GDP deficit ceiling put in place by the eurozone's stability and growth pact until at least 2010.

Unveiling the final chapters of its World Economic Outlook report on Wednesday, the IMF predicted that the country's deficit will reach 3.9% this year, and will be around 3.2% by 2010.

Speaking to reporters following publication of the report, Raghuram Rajan, economic counsellor and director of the IMF's research department explained that sluggish economic growth in Germany was one of the key factors in the higher-than-desirable deficit figure.

However, referring to the Agenda 2010 economic reforms proposed by the previous government, he recommended that they be taken to their "logical conclusion" by "increasing the incentives for corporations to actually hire more people, for example by reducing some of the regulatory burden on them, reducing the extent of payroll taxes, and so on".

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