Waigel survives gold crisis confidence vote

THE German finance minister, Mr Theo Waigel, survived a vote of no confidence in the Bundestag yesterday following Bonn's capitulation to the Bundesbank over a controversial plan to qualify for entry to Economic and Monetary Union by revaluing the bank's gold reserves.

Mr Waigel confirmed in parliament that, although the gold will be revalued this year, no profits will be transferred to Bonn until 1998. This means that the scheme will have no impact on Germany's chances of meeting the Maastricht criteria for entry to the single European currency.

During a stormy debate, opposition leaders accused Mr Waigel of presiding over a failed financial policy that had led to record unemployment and chaotic public finances. But Chancellor Helmut Kohl defended his finance minister and insisted that Germany remained on course to join EMU on schedule in 1999.

Dr Kohl repeated his determination that EMU should start on time, arguing that, far from resolving problems, a postponement would create new difficulties.

Mr Waigel announced a freeze on public spending, requiring all new spending above DM1 million to be personally approved by himself. Without the gold revaluation profits, the government is left with a DM10 billion shortfall in this year's budget.

The three party ruling coalition is also faced with a dilemma over how to plug a DM 15 billion gap in the 1998 budget, with the tiny Liberal Free Democrats (FDP) threatening to walk out of government if Mr Waigel increases taxes.