Finance Minister Peer Steinbrueck wants to use €2.0 billion in funds Germany received from the United States under the post-war Marshall Plan to plug holes in the budget deficit, the Financial Times Deutschland reported yesterday.

The paper, without citing its sources, said Mr Steinbrueck hoped to transfer the funds in 2007 to help get the deficit below European Union limits next year, as foreseen in the new government's coalition programme.

A spokesman in the Finance Ministry said he could not confirm the report, which echoed a story the paper published in June last year.

"We have just started planning the 2006 budget," the spokesman said, noting that specific budget measures would be discussed at a two-day Cabinet meeting scheduled for the beginning of next week.

Back in June the ministry, then led by Hans Eichel, denied it planned to use funds from the so-called European Recovery Programme (ERP). But the previous government did agree plans to transfer management of the funds from the Economy Ministry to state-owned bank KfW.

The US embassy in Berlin is reported to have sent a letter to Germany's Foreign Ministry last May saying Washington should have a say in any use of the funds.

Under the Marshall Plan, named after former US Secretary of State George Marshall, Germany received around $1.2 billion in loans from the United States between 1948 and 1952 to help rebuild its industry.

Over the years the pot has swollen to about €12 billion thanks to repayments on the original loans and relending.

The FTD said Mr Steinbrueck, a member of the centre-left Social Democrats (SPD), was at odds with conservative Economy Minister Michael Glos over what to do with the remaining €10 billion in ERP funds.

The paper said Mr Steinbrueck wanted to transfer the sum to KfW, while Mr Glos wanted it to remain in the hands of the federal government, while giving KfW responsibility for managing it.

The report comes a week before Angela Merkel is due to make her first visit to Washington since becoming Chancellor in November.

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