Germany's budget deficit dropped more than expected in 2006 to 1.9 % of gross domestic product, Finance Minister Peer Steinbrueck said Friday.
New debt came in at 27.9 billion euros ($36.23 billion), more than 10 billion euros ($12.98 billion) less than the 38.2 billion euros ($49.6 billion) forecast in the budget. It is the first time since 2001 that Germany's deficit has come in below the 3 % maximum set by the European Union for the 13 nations using the euro currency.
Steinbrueck forecast in November that the budget deficit would come in at 2.2 % for 2006 and narrow further to 1.5 % in 2007.
The improved state of public finances follows a forecast rise in tax revenue, a large part due to the 3 percentage point increase in value added tax to 19 % on Jan. 1, and economic growth of 2.5 % in 2006, the fastest rate in six years.