Berlijn krijgt extra jaar voor begrotingstekort, kritiek op Poolse rapportage economische cijfers, Slovenië op koers voor euro in 2007 (en)

In a compromise move the European Commission has granted Germany an extra year to bring its budget deficit under the EU's three percent of GDP limit, while Poland received a rebuke over its accounting methods.

EU monetary affairs commissioner Joaquin Almunia i on Wednesday (1 March) announced that Germany will be given until the end of 2007 to comply with the EU's stability and growth pact, the set of rules underpinning the euro.

German media report that Brussels had originally envisaged a 2006 deadline for Berlin, which has reported budget deficits of more than 3 percent of gross domestic product (GDP) since 2002.

But under a carefully prepared deal with the new German government, led by conservative chancellor Angela Merkel, Berlin has now been given more breathing space.

The deal also includes a formal stepping-up of the so-called excessive deficit procedure against Germany, meaning that Berlin is now only one step away from a multi-billion fine for breaking the pact.

"Although the commission welcomes the renewed priority attached by the German government to budgetary consolidation, it is clear that the procedure needs to be stepped up to guarantee a lasting correction of the deficit," Mr Almunia stated.

Ms Merkel has made the consolidation of Germany's dire public finances one of her key priorities, and has also promised close co-operation with Brussels.

Her line, backed by her finance minister Peer Steinbruck, stands in contrast with the previous government led by Gerhard Schroder who frequently clashed with the commission over Germany's deficit.

The German finance ministry said it will meet the commission's expectations, stating "Germany will achieve an underlying structural deficit improvement of about 1 pct point in the next two years, thus meeting the Commission's guidelines," according to AFX.

Germany last week announced a deficit of 3.3 percent in 2005.

EU finance ministers have to approve the commission's line on the German deficit on 14 March, with German media foreseeing no difficulties.

Meanwhile, commissioner Almunia on Wednesday upped pressure on Poland, which is expected to meet the EU's stability pact criteria in preparation of eventual eurozone membership as part of a so-called convergence programme.

"The Polish convergence programme does not provide a budgetary adjustment path sufficient to correct the excessive deficit by 2007, as recommended by the Council [member states' finance ministers], or even 2008, despite good growth prospects," Mr Almunia indicated.

The commission in a statement criticised Warsaw's accounting methods, which include contributions to so-called funded pension schemes as government revenue.

"Without these contributions the general government balance _ would be -4.7% in 2005, -4.6% in 2006, -4.1% in 2007 and -3.7% in 2008," the statement reads.

Poland's government has said that its deficit would be just 2.6 percent this year if the pension revenue could be counted, according to IHT.

The Polish government, led by the social conservative Law and Justice party, has indicated euro entry is not a priority, with Poland being the only "new" member state which has not yet set a deadline for euro adoption.

By contrast, Slovenia is preparing for eurozone membership as planned on 1 January 2007, Die Welt reports.

Prices in Slovenian supermarkets and restaurants are being shown in euro from this week onwards, next to prices in the country's national currency Tolar, the paper writes.

Estonia and Lithuania are also planning to enter the euro next January, but the commission has expressed doubts over these countries' readiness following reports of high inflation.