Speaking after an informal meeting of EU finance ministers in the Finnish capital of Helsinki on Saturday, Steinbrück said that so-called excessive deficit procedures against Germany by the EU would only end in October.

"But the penalization process has been stopped," a beaming Steinbrück said. He added that Berlin would present new figures on its budget deficit to the EU Commission in October.

"Happy about the praise"

The EU Commission, which polices public finances in the 25-member bloc, recommended in July this year not to continue with deficit proceedings against Germany.

According to EU finance ministers, the German government has taken all the steps needed to lower by 2007 its budget deficit below the 3 percent ceiling laid down by the EU's Stability and Growth Pact. EU officials in Brussels earlier this week welcomed Steinbrück's statement that the German budget deficit would stand at 2.8 percent of gross domestic product (GDP) this year -- meeting eurozone demands.

Steinbrück reiterated he was optimistic that Germany would rein in its budget deficit to uphold the 3 percent ceiling this year.

"We're very happy about the praise and recognition and -- I'm not going to shy away from saying it -- also about the compliments for the fact that Germany will be below the 3-percent ceiling this year," Steinbrück said.

If Germany did indeed manage to lower its deficit, it would be the first time since 2001.

Germany has violated the pact every year since 2002 and has been under fire by the EU since Jan. 2003 when the Commission opened deficit proceedings against it in Jan. 2003. Other key eurozone countries, including France and Italy, have also been reprimanded by the EU for not respecting the bloc's fiscal rules.

Excessive deficit action by the EU carries the risk of countries being slapped with hefty fines.