GERMANY cut its 2010 budget deficit forecast yesterday and said it hopes to comply with an EU-mandated limit a year earlier than expected, while Slovakia's new government became the last to approve a rescue fund for debt-troubled eurozone countries.

Germany, Europe's largest economy and a leading advocate of getting public finances under control, cut its 2010 deficit prediction to 4.5 percent from 5.5 percent.

It also said it expects its deficit to drop to 3 percent, the maximum allowed under European Union rules, in 2012. It had pledged to get the shortfall below that level by 2013.

The Finance Ministry pointed to lower spending on benefits as a result of moderate unemployment, as well as a higher tax take and proceeds from an auction of cell phone frequencies. With the economy growing, that has allowed it to reduce its plans for new borrowing this year.

Along with several other countries in the 16-nation eurozone, Germany has embarked on an austerity drive in the wake of the debt crisis that started in Greece and focused market attention on European nations' public finances.

That crisis culminated in May's agreement on a 750 billion euros (US$950 billion) financial rescue package that can be tapped if other indebted EU nations need help.

The center-right coalition government in Bratislava initially had balked at paying Slovakia's part of the package, 4.37 billion euros. However, it signed up yesterday, and the deal now goes to parliament for approval.

Rejected

The government did, however, reject paying Slovakia's 800 million euros share - less than 1 percent - of a separate 110 billion euros rescue package from eurozone partners and the International Monetary Fund for Greece.

Athens narrowly avoided default in May when it received the first installment of the package.

The euro, which has rebounded recently after being pounded for months amid worries about the debt crisis, appeared unaffected by that aspect of Slovakia's decision.