Schaeuble Plans Tighter Control Over State Deficits, FAZ Says

German Finance Minister Wolfgang Schaeuble plans to force the country’s states to define binding spending limits starting in 2014 to ensure adherence to a constitutional balanced-budget rule for the regions from 2020, Frankfurter Allgemeine Zeitung reported.

The plan is part of the implementation in Germany of the so-called fiscal pact among 25 European Union governments that aims to ensure budget discipline, the German newspaper said.

Tighter budget controls would thwart plans by the government of North Rhine-Westphalia, a coalition of the Social Democrats and Greens that are in opposition at national level, to raise the budget deficit to boost economic growth, the newspaper said. The state votes on May 13.

Schaeuble’s road map for state deficits makes it harder for the opposition-controlled upper house of parliament, where the states are represented, to block the fiscal pact on the grounds that repercussions on state finances are unclear, FAZ said.

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net