BERLIN, Jan 12 (Reuters) - Germany’s federal government posted a budget surplus of 6.2 billion euros ($6.60 billion) last year, helped by a strong economy and low borrowing costs, senior government sources said on Thursday, adding they wanted to use the windfall to amortize debt.
It is the third consecutive year Europe’s biggest economy has not needed net new borrowing. The 2015 federal surplus was 12.1 billion euros, said the sources.
“We want to suggest to the lower house of parliament that this money is used for amortizing debt,” said one senior government source.
In an election year, the surplus has triggered a debate among Chancellor Angela Merkel’s conservatives and her Social Democrat (SPD) coalition partners over whether the windfall should be used to pay off old debt or raise public investment.
Some Bavarian conservatives have called for tax cuts.
“We should give citizens something back. In view of low interest rates and rising inflation, we need quick tax reductions,” Markus Soeder told Bild daily.
The senior government sources said the government wanted to send a signal to European and international partners that having a budget surplus is not at odds with achieving growth.
“We are showing that both are possible,” said the source.
The German economy grew by 1.9 percent in 2016, the strongest rate in five years, the Federal Statistics Office said earlier.
($1 = 0.9398 euros)
Reporting by Gernot Heller; Writing by Madeline Chambers; Editing by Paul Carrel
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