By Ruth Bender and Andrea Thomas

BERLIN--German Chancellor Angela Merkel Thursday played down the size of the German budget surplus after statistics showed it hit its highest mark since German reunification.

"If you take the federal level alone, the surplus is rather limited," Ms. Merkel told reporters Thursday.

Ms. Merkel said, as a result, the federal government's fiscal room to maneuver was in fact rather limited. The government wants to boost spending on domestic security and on defense committed to allies in the North Atlantic Treaty Organization, as well as on improving social wellbeing, she said.

"At the same time, we don't want to take on new debt. So the room for maneuver we have is rather limited," she said. "I'm not worried that we won't know what to usefully do with the money that might be available," she said.

The national budget surplus, which comprises the central government, the states, local administration and social security funds, rose to 23.7 billion euros ($25 billion) in 2016, the highest surplus since 1991, the country's statistics agency said earlier Thursday.

The government's limited fiscal leeway was also highlighted Thursday when Germany's Bundesbank central bank reported a sharply lower profit.

The German central bank's net profit fell to EUR399 million ($420.81 million) in 2016 from EUR3.2 billion the year before, leaving it EUR2.1 billion short of the amount the government had penciled into its 2017 spending plan.

A finance ministry spokesman said this will pressure government coffers but the shortfall is unlikely to generate a budget deficit this year.

"Our experiences over the past budget years have shown that the government's budget plans have always been solid," said finance ministry spokesman Jurg Weissgerber. "From today's point of view, it is not foreseeable that the budget could fall into deficit as a whole at the end of the year because of this reduction."

The German government has posted budget surpluses since 2014 and aims to do without new debt through to 2020.

Write to Ruth Bender at ruth.bender@wsj.com and Andrea Thomas at andrea.thomas@wsj.com

(END) Dow Jones Newswires

February 23, 2017 10:34 ET (15:34 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.