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Mexican congressmen carry silver liberation message to Latin American conference
Germany Considers Gold,
Railway Sales to Ease Record Deficit
By Brian Parkin
Bloomberg News Service
Saturday, November 12, 2005
http://www.bloomberg.com/apps/news?
pid=10000100&sid=ayRHxsBnT5XY&refer=germany
BERLIN -- German Chancellor-designate Angela Merkel's new government
may sell some gold reserves and a stake in the state-owned railway
to help plug the budget deficit, the country's new finance minister,
Peer Steinbrueck, said.
Steinbrueck said Merkel's coalition, which brokered policy accords
for the next four years on Nov. 10, aims to cut the deficit while
raising investment to help the economy. Proceeds from a partial sale
of Deutsche Bahn AG and some of the central bank's gold reserves may
be used to set up a 25 billion-euro investment fund, Steinbrueck
said.
"There may be scope to sell" central bank gold within an
international treaty, Steinbrueck told reporters in Berlin, adding
that Bundesbank approval is needed to sell gold. "We would want to
uphold both the Bundesbank's independence and the substance of the
reserves."
Germany's new coalition is gambling that spending cuts and higher
taxes next year, combined with investment, will help bring the
budget deficit below a European Union limit by 2007 without choking
the economy. The plan by Christian Democrat Merkel, 51, and the
Social Democratic Party also rests on economic growth and a record
credit line to help pay for investment.
The Bundesbank has so far resisted government calls to use the
world's second-largest gold reserves to help plug the deficit. The
bank sold less than 7 percent of its allotment in the first year of
a European agreement on central bank gold sales.
"It's early days and we have to speak about details," Steinbrueck
said today.
Germany has breached an EU rule limiting the deficit to 3 percent of
gross domestic product for the past three years. Merkel's coalition
has pledged to bring the deficit in line with that limit for the
first time in six years in 2007.
The move to run up a new net credit line that will exceed 1996's
record 40.1 billion euros is "deliberate," Steinbrueck said. "`We
have to let the economy breathe before 2007."
Chancellor Gerhard Schroeder's decision to call early elections on
May 23 has led to a six-month suspension of proposals to help the
budget, ranging from selling index-linked bonds to introducing real
estate investment trusts.
Steinbrueck said he's looking into the possibility of introducing
REITs, which allow smaller investors to invest in property by buying
shares in the trust, providing he won't lose revenue.
The new coalition plans to channel about a quarter, or 6 billion
euros, of its investment fund into research and development,
Steinbrueck said. The goal may be reached in part by selling a stake
of Europe's biggest rail network.
Merkel plans to sell shares in the railway as early as next year,
the Frankfurter Allgemeine Zeitung reported on Nov. 3, citing
unnamed lawmakers.
The SPD and the Christian Democratic Union, including its Bavarian
affiliate party, the Christian Social Union, are due to vote on
combined policy proposals on Nov. 14.
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