BERLIN, May 28 Reuters Germany faces rising spending pressures and the government should consider easing the debt brake, the International Monetary Fund said on Tuesday, but finance ministry sources said such a move carried the risk of fuelling inflation.

Altering the rules of the debt brake, which limits public deficits to 0.35 of gross domestic product, would require a twothirds majority in the upper and lower houses of parliament.

Germany39;s debt brake is set at a relatively tight level, such that the annual limit on net borrowing could be eased by about 1 percentage point of GDP while still keeping the debttoGDP ratio on a downward trend, the IMF said in a report.

This would allow more room for muchneeded public investment, it said.

In November, a court ruling blew a 60 billion euros hole in public finances and threw the government39;s financing framework into turmoil.

Although reforming the debt brake would ease fiscal consolidation, reforms to reduce mediumterm spending pressures and increase revenues were also needed, the IMF added.

The brake is fiercely defended by Finance Minister Christian Lindner. According to finance ministry sources, the IMF recommendation carries risks.

Reforming the debt brake harbours the risk of once again fuelling inflation, which has only just started to fall, said the sources, adding that higher debt also meant higher interest rate costs.

In its World Economic Outlook published in April, the IMF cut its forecasts for…