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Austria: Spindelegger Expects Significant Increase of Deficit

Published: April 1, 2014; 14:59 · (Vindobona)

According to the Finance Minister, the consequences of the Hypo-disaster are “dramatic”. However, he does not see a danger of deflation.

The Hypo Group disaster could negatively effect the budget in 2015. / Picture: ©

Finance Minister and Deputy Chancellor Michael Spindelegger expects both the budget deficit and state debts to jump up. “We can see what dramatic consequences we suffer from now by the blue scandal (caused by the FPÖ, Austrian Freedom Party, Ed.) many years ago,” Spindelegger said on Tuesday ahead of the beginning of the meeting of the Eurogroup in Athens.

On the question if the disaster around nationalized Hypo Group will have negative effects on the state budget even in 2015, the minister said: “We will see. The question remains which losses of Hypo we will have to brace ourselves for. This is still unclear,” Spindelegger said adding that he hoped the figures forecast by the bank itself were realistic. “We will see if that turns out right once we start to forward (bad loans) to the downsizing units,” he added.

However, Spindelegger does not see a danger of deflation. “From my point of view there is nothing to fear. We need to generate growth in the European Union and in Austria again. But we do not need to fear the future. We will head for growth of 1.7 percent in Austria. These are good propects for the future,” he said.

With regard to the current situation with former parent company of Hypo Group BayernLB, Spindelegger once again announced intending to lead talks with the Bavarian lender. “We aim at a settlement,” he said. However, he will only inform the public about further steps “as soon as we know what to do with Hypo Group, how it will be designed,” Spindelegger claimed.