Germany sticks to balanced budget target despite refugee influx

Germany's finance ministry said Monday it would stick to its target of having a balanced budget this year and next despite increased spending due to the refugee influx.

"The country is able to respond to the unexpected challenges," said Thomas Steffen, the ministry's state secretary said in a statement.

According to the ministry, the German federal government would give state and local governments 3.0 billion euros (about 3.4 billion U.S. dollars) of the 2016 budget to cover the costs of accepting refugees. Another 3.0 billion euros would be spent on federal programs.

Steffen said tackling the refugee crisis was the German government's top priority, and sound finances were the prerequisite for the actions.

The German government planned to receive 800,000 new asylum applications in 2015. The cost of feeding, housing and integrating the new arrivals was expected to reach 10 billion euros by the end of this year.

Earlier this month, German Finance Minister Wolfgang Schaeuble told lawmakers that the government was "in a position to react" to the expected increasing cost because of the "financial leeway" earned with stable economic growth and tax revenues in recent years.

The finance ministry said on Monday that the German economy would continue its moderate growth path in the third quarter this year thanks to low oil prices, depreciation of the euro as well as a stable labor market and consumer confidence.

German central bank, Bundesbank, also predicted on Monday the economic upswing would continue in the coming months. It expected the German economy, which grew by 0.3 percent in the first quarter and by 0.4 percent in the second, to expand by 1.7 percent over the whole year of 2015. Endit