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Schroeder, Greens forge government
FRANKFURT, Germany -- German Chancellor Gerhard Schroeder's new centre-left coalition government has issued a veiled call for the European Central Bank to cut interest rates. Schroeder's SPD party earlier on Wednesday signed a new coalition pact with the Greens party for its next four years in power. But both sides now have to urgently tackle the question of how to cover the country's budget deficit. The new partnership government called on the European Central Bank to use monetary policy to help boost investment and growth, in what was widely seen as a veiled call for lower interest rates, Reuters news agency reported. Germany's re-elected government used the text of its coalition agreement to say it planned to cut the nation's budget deficit to zero by 2006. "This policy must be complemented at a European level by a monetary policy that leads to more investment, and therefore more growth," the statement read. But a central bank spokesman told Reuters: "The ECB has no comment on coalition agreements." Meanwhile on Wednesday, Germany's finance minister conceded the government won't be able to keep its 2002 budget deficit below the EU's limit of 3 percent of GDP. In an interview on n-tv television, Hans Eichel said a sluggish economy has meant less tax revenue than expected for September, usually a good month for collections. "I believe that we won't succeed in keeping the deficit under the 3 percent limit this year, that's the way it looks now," he said. On the issue of coalition talks, Franz Muentefering, the new parliamentary leader of the Social Democrats, recently said: "The government's most important goal is to boost economic growth and lower unemployment. "There is a great deal of harmony between us (SPD and Greens) on what we want to do for the country and for its social, economic and ecological ... development," he told ARD television. The environmentalist Greens, junior partner to the Social Democrats, kept Schroeder in power with the best showing of their 22-year history in Germany's general elections three weeks ago, boosting their bargaining power in coalition talks. The Greens have declared they intend to use their position to introduce more green policy in government, but are set for a battle with Schroeder's SPD. Copyright 2002 CNN. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.
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