By Matthias Sobolewski

BERLIN (Reuters) - Germany will pay about 5 billion euros ($5.46 billion) less interest on its debt than originally planned this year as its public finances continue to benefit from low interest rates, sources in the coalition government told Reuters on Thursday.

The 2016 budget had included a provision of 23.8 billion euros to service old debt. But that figure has now been revised down to no more than 19 billion euros, the sources added.

Finance ministry estimates seen by Reuters show it had paid 17.8 billion euros in interest in the first nine months of the year and interest payments for the last quarter are expected to be significantly lower than in each of the first three quarters.


German public debt stands at 1.3 trillion euros. About a fifth of this debt matures every year, allowing the finance ministry to replace old bills with new paper at lower rates.

Germany wants to stick to a balanced budget over the next four years and reduce its debt to less than 60 percent of gross domestic product in 2020 for the first time since 2002, meeting a criterion set out in the EU's Stability and Growth Pact.

Germany's benchmark 10-year bond yield has risen 20 basis points this month, moving out of negative territory.

(Writing by Joseph Nasr; Editing by Jeremy Gaunt)