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Hypo Group: Huge Burden for Austrian Budget

Published: April 29, 2014; 10:40 · (Vindobona)

The downsizing of problem bank Hypo Group Alpe Adria is a huge burden for this year’s budget.

The budget deficit is expected to decline continuously in the coming years. / Picture: © Vindobona.org

According to data by Finance Minister Michael Spindelegger, who will hold his first budget speech at the National Assembley today, the deficit amounts to 2.7 percent of GDP after it came at 1.5 percent previously. However, after the considerable increase state debts are supposed to drop again next year.

Without the crisis bank the budget deficit would only amount to 1.4 percent. Moreover, the state debts reach a new high with 79.2 percent after last year’s 74.5 percent. Shortly before Spindelegger’s speech in the National Assembley the government decided about the budget for the years 2014 and 2015 in the Council of Ministers as well as the financial planning for the coming four years. According to Spindelegger, party leader of the Austrian People’s Party (ÖVP), “solid finances” are required, which would be created by the budget plans and the financial plan.

Revenues of the Austrian state come at € 72.2bn, according to the budget, while expenses amount to € 75.7bn. The deficit accounts for arund € 3.6bn which equals 2.7 percent of GDP, and is therefore significantly above the 1.5-percent target. Ahead of his budget speech, Spindelegger told journalists yesterday during a background discussion that this only had “one reason with four letters, called Hypo”.

Without the problem bank the debt quota would be 4.6 percentage points lower than the current 79.2 percent. State debts, which were previously estimated to come at 73.0 percent, have reached a new record high for the sixth time in a row. In the coming years, however, public debts are expected to decrease gradually. The budget plan aims at a debt quota of 75.6 percent in 2016 while in 2018 it is supposed to come at 71.5 percent of GDP.

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