German budget will focus on east

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ON THE second anniversary of German currency union, the Bonn Cabinet yesterday approved a budget for 1993 in which the east will remain the most significant area of expenditure.

Hailing the currency merger as a 'historic chance' that was seized at the right moment, Chancellor Helmut Kohl admitted that economic recovery in eastern Germany was taking longer and costing a great deal more than had been expected in 1990.

Opposition Social Democrats used the occasion to reiterate their objections at the time, saying that the failure to provide temporary protection measures had led to the destruction of eastern Germany's industrial base.

Outlining his proposals for 1993, Theo Waigel, Finance Minister, said that the total increase in the budget would be kept to 2.5 per cent as planned, with expenditure rising to DM435.65bn ( pounds 154bn). But he stressed that this included almost DM92bn that had been set aside for the new eastern Lander (regional states), a real increase of 6.9 per cent over 1992. According to Chancellor Kohl, one mark in every five will go to the east, a clear demonstration of the government's determination to make the rebuilding of the region its priority.

The highest single area of expenditure will be in the Employment Ministry, which will receive an extra 8.8 per cent, bringing its total budget to almost DM99bn. The Transport Ministry, responsible for massive rebuilding schemes in the east, will see its budget rise by 10.7 per cent to just over DM44bn.

But Mr Waigel was able to keep the overall rise down to 2.5 per cent thanks to very small increases and even cuts in other areas, such as defence, where next year's budget will drop by 2.5 per cent to DM50.8bn, helped by Germany's decision on Tuesday not to go ahead with the European Fighter Aircraft project. Mr Waigel said that through careful savings, the government's borrowing requirement, which shot up as a result of unification, would drop next year from DM40.5bn to DM38bn.