2nd UPDATE: German Min: Tax Revenue Numbers 'Remarkably Bad'

Saturday, May 09, 2009

(Updates with more comments on Opel)


 
    By Nour Malas 
    DOW JONES NEWSWIRES

Germany's tax revenue for the year, expected in a forecast next week, will be "remarkably bad," but there is a chance the economy will see growth by the end of the year, the country's minister of economy said Saturday.

"The numbers will be expectedly but remarkably bad," Karl-Theodor zu Guttenberg told Zawya Dow Jones in Abu Dhabi on the sidelines of the inaugural meeting of a joint Emirati-German federal business council.

The tax revenue shortfall will be reworked into the budget, zu Guttenberg said, declining to give numbers. "We will have to reestablish our budget by the Bundestag, as well, this is what they're going to ask us for," he said, adding "the precise numbers" will be released May 14.

"The reaction must be that we still keep moving," and the decreased revenues must not lead the economy into stagnation, the minister said.

Germany's economy will probably bottom out and still see slight growth by the end of the year, he added.

"We will probably see the bottom around the end of the year, maybe before," he said.

German officials are expecting "tiny growth" for the end of the year and see opportunity in that, he said.

"We still see opportunity in the tiny growth we are expecting for the beginning of the end of the year, and specifically next year," he said.

The German government will not inject funds into Opel, the General Motors (GM) subsidiary being offered a takeover by Italian carmaker Fiat (FIATY), but it may guarantee acquisition loans.

"I rule out that the state acquires stakes and that the state will become part of the company as such," zu Guttenberg said.

"We might talk about guaranteeing acquisition loans, but that's about it," he said, adding Opel's fate lay in the hands of GM and the two potential investors, Fiat and the Canadian-Australian Magna International (MGA).

"We shouldn't overestimate the possibilities the government has or hasn't," he said. "The main decision has to be made between the two main players in the field, GM Detroit and some investors."

Fears a Fiat-Opel company would mean possible job cuts and downsizing of Opel factories are "an intellectually limiting argument," zu Guttenberg said.

"It undermines the negotiation position of any of those who want to be rescued, or saved," he said.

Opel's two competitors have offered "rough frameworks," both of which are interesting, he said. "It's more or less a position they have offered. Now we need precise numbers."

"The decision if and how Germany will help really depends on the substance of the concept, and on the decision of GM."

-By Nour Malas, Dow Jones Newswires; +971 4 374 8044; nour.malas@dowjones.com

(END) Dow Jones Newswires

09-05-09 2030GMT