By Andrea Thomas

BERLIN--Germany's government posted a budget surplus of 6.2 billion euros ($6.53 billion) last year, supporting Chancellor Angela Merkel's positive economic record as she campaigns to win a fourth term in this fall's general election.

The finance ministry said Thursday that a strong economy, low interest rates, higher tax revenues and a robust labor market helped achieve the third budget surplus in a row.

It was, however, lower than the EUR12.1 billion surplus in 2015, which had been the highest level since the end of World War II.

A senior official said the finance ministry will propose to parliament that the surplus is used for debt redemption. The government's debt reached EUR1.27 trillion last year.

"It's historically unique that we achieved budget surpluses for three years in a row," said the official, who declined to be named. "With this, we can send an encouraging signal of stability and a signal that it's possible to consolidate, generate surpluses and at the same time to give investment and growth incentives."

The government has also still EUR6.1 billion in untouched reserves that it had put aside in late 2015 for accommodating and integrating the over 1 million asylum seekers who have arrived in Germany since 2015.

Germany already managed a balanced budget in 2015 as well as 2014-the first since 1969.

Earlier Thursday, government data showed that Germany's economy grew by 1.9% last year, propelled by a buoyant labor market and a pickup in government spending, making it one of the fastest-growing economies out of the Group of Seven industrialized nations.

Some criticized, however, that the government is focusing too much on the migration crisis and neglecting other pressing issues. Some have also said the government should cut income tax substantially, given the budget surpluses in previous years.

The ruling government parties have said they want to use the current fiscal leeway for income tax cuts after this year's general election.

The government's overall spending reached EUR311.2 billion last year, EUR5.7 billion less than penciled into the budget, with tax revenues overshooting the previous target by EUR0.9 billion.

The government aims to have a balanced budget through to 2020.

Write to Andrea Thomas at andrea.thomas@wsj.com

(END) Dow Jones Newswires

January 12, 2017 05:14 ET (10:14 GMT)

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