German Chancellor Angela Merkel's Cabinet of Christian Democrats and liberal Free Democrats on Wednesday approved a draft plan aimed at the fastest possible reduction in the nation's debt.

According to figures presented by Finance Minister Wolfgang Schäuble and Economics Minister Philipp Rösler in Berlin, net fresh borrowing would dip to 6.4 billion euros ($8.3 billion) in 2014, down from 17.1 billion euros in the current year.

Watch video 01:16 German GDP set to grow in 2014

They said that from 2015 Germany would take on no new debt and a budget surplus of 5 billion euros would be secured in 2016. If implemented, the figures would mean the lowest borrowing in about four decades.

'Solid finances'

"With all modesty, this is a result of historic proportion," Rösler told reporters in Berlin. "The lesson from the sovereign debt crisis is that solid finances are essential."

Finance Minister Wolfgang Schäuble used the occasion to once again brush aside accusations from fellow eurozone countries that Germany had been insisting on too much austerity in Southern Europe. He argued the Germany example was proof there was no contradiction between budget consolidation and growth.

According to the Cabinet, the strong performance of the German economy and its labor market had helped to boost tax revenue and produce a solid fiscal basis for the country. The increased tax income has not been used to increase spending, according to the Cabinet.

hg/dr (dpa, Reuters)