PARIS -- France and Germany said on Monday they respected the euro zone's stability and growth pact on budget discipline but called for it to be interpreted with flexibility as their economies flag.

The two countries, the two biggest economies in the euro zone, are close to breaching deficit limits set by the pact, which underpins the value of the euro currency.

"Germany and France are wholly decided to respect it in its spirit and letter," French President Jacques Chirac said of the pact after meeting German Chancellor Gerhard Schroeder for an informal dinner in Paris.

"We want to stick to this pact," added Schroeder. "We will stick to it," Schroeder said. "But we must keep to it in a growth-orientated way because stability is a concept that cannot and should not only be seen in a strict way but should also include the political dimension of growth."

Both France and Germany have public deficits dangerously close to an upper ceiling permitted under the euro zone's stability and growth pact of three percent of gross domestic product (GDP), above which they could face heavy fines.

The pact also calls on countries to balance their books in the medium term -- an area where both France and Germany are struggling to make progress as their economies struggle to grow and generate the tax receipts they need to cut their deficits.

Giving the countries more time to balance their books would give them greater fiscal flexibility in the near term.