BONN, NOV. 16 -- The West German government, under growing international and domestic pressure to speed up its economy and help avert a possible global recession, is willing to allow its budget deficit to widen more than planned next year and to keep interest rates from rising in coming weeks, officials said today.
But the officials are strongly resisting more sweeping measures, sought by the United States and other critics to spur domestic growth.
Finance Minister Gerhard Stoltenberg said Bonn had no plans to jack up domestic demand by adopting planned tax cuts earlier than scheduled, as the United States and other countries have urged.
"Our plans are known. We are sticking to them," Stoltenberg said after a meeting of European Community finance ministers in Brussels.
In addition, the Bundesbank, or central bank, is unlikely to lower its discount rate, the economy's most important underlying interest rate, in the near future, government sources said. As a result, Washington should expect no major new expansionary measures from Bonn in return for an expected agreement between the White House and Congress on measures to rein in the U.S. budget deficit, the sources said.
Bonn's "payoff" to Washington for a U.S. budget deficit pact, which is strongly desired in West Germany, is expected to be limited to a commitment to refrain from adopting more restrictive economic measures, they said.
A U.S. official said Washington remains dissatisfied with the West Germans' declared economic policies. He said the West Germans were offering "not very much," and he complained that they "don't seem to be willing to accelerate their tax cut."
Stoltenberg also said Bonn would like to see a delay between adoption of a U.S. deficit plan and convening a meeting of western finance ministers to consider further steps.
U.S. Treasury Secretary James A. Baker III has said that the U.S. government would seek a meeting of finance ministers of the Group of 7 industrial nations after Washington agrees on a deficit-reduction package, and that West Germany would come under new pressure at that meeting to adopt more expansionary measures. "We will need some additional arrangements before we can make a decision about a suitable time for a meeting," Stoltenberg said.
The current thrust of West German policy was decided Thursday at a confidential meeting chaired by Chancellor Helmut Kohl and attended by Stoltenberg, Economics Minister Martin Bangemann and Bundesbank President Karl Otto Poehl.
In addition, Bangemann, leader of the junior Free Democratic Party in Kohl's three-party coalition, wrote a letter to Stoltenberg last week urging a less restrictive policy.
Franz Josef Strauss, leader of the Bavarian-based party that is the other junior partner, recently expressed support for a tax-cut speedup.
At the meeting, the officials reached an "understanding" that the government would accept a higher budget deficit than planned in 1988 if an economic downturn reduces tax revenue or if there is a fall in the profits earned by the Bundesbank and handed over to the Finance Ministry, government and monetary sources said.
Stoltenberg confirmed today that the government would "tolerate" a larger deficit than the $17 billion shortfall forecast for next year if there were a decline in revenue. A wider budget deficit tends to encourage growth.
But Stoltenberg rebuffed Bangemann's proposal that the government should go further and rule out a tax increase next year on gasoline and other petroleum products, and on other consumer goods such as cigarettes.
Such tax increases, by reducing consumers' spending power, would curb growth.
Stoltenberg, who belongs to Kohl's Christian Democratic Union, also turned down Bangemann's suggestion that the government should keep open the possibility of an earlier adoption of tax reductions if necessary to avoid an economic downturn.
West German government sources suggested, however, that the tax package could be adjusted in three to six months if economic prospects worsened.
"This is all we can offer at the moment," a government source said. "I don't know what we'll do in half a year" if a world economic slowdown begins.
The government plans to reduce taxes by $8 billion on Jan. 1, and by a larger amount in 1990.
The United States, along with other West German allies in Western Europe and this nation's leading economic research institutes, have urged Bonn to implement some of the 1990 tax cuts next year or in 1989.
Stoltenberg has responded that he cannot change the tax package because he could not get the necessary approval from individual West German states under his nation's complex federal structure.
He also has contended that bigger tax cuts, and the resulting larger deficit, would tend to push up interest rates and have a recessionary impact.