Germany's drive to qualify for the single European currency got a possible boost yesterday with an agreement allowing the government to raise badly needed cash by selling a stake in Deutsche Telekom.

The telecommunications giant said it had agreed with the government that Bonn would transfer shares equivalent to 25 per cent of Telekom's capital to the state development agency Kreditanstalt far Wiederaufaau (KfW).

The shares would be transferred in two steps in 1997 and 1998 and would be sold later to strategic investors.

Bonn is desperately seeking cash to cut its budget deficit to the equivalent of 3 per cent of gross domestic product (GDP), a target would be members of the single European currency are supposed to meet this year to qualify for economic and monetary union (EMU) in 1999.