Budget deficit to remain at 4.5 percent despite worse forecast

Finance Minister Markus Marterbauer (SPÖ) specifically expects a deficit of over 23 billion. This would correspond to 4.54 percent of GDP, instead of the originally forecasted 4.51 percent. The fact that the Maastricht balance has only minimally worsened despite the forecast deteriorating by a good billion is due to the nominal GDP also increasing accordingly.

Budget Deficit: Successful Federal Government - States and Municipalities Perform Worse Than Expected

Marterbauer emphasized that the federal government has performed quite successfully. In this sector, the deficit is significantly, specifically by a good 800 million, lower than assumed in April and is expected to land at 3.2 percent of GDP or 16.46 billion. State Secretary for Finance Barbara Eibinger-Miedl (ÖVP) attributes this, among other things, to the "strict execution." Maintaining the course is "a very important signal" towards Brussels and the capital markets.

In contrast, states and municipalities as well as social security perform significantly worse than the federal government. Here, the assumptions have worsened by nearly 1.4 billion and a good 440 million, respectively. The deficit is expected to be 6.2 billion. According to Marterbauer, the municipalities are primarily responsible for the worse figures, but he simultaneously defended them.

"I believe there are really financing problems there." Therefore, the revenues and expenditures of the municipalities will still need to be addressed. Eibinger-Miedl pointed to the expansion of childcare services and high costs in the social sector.

Willingness to Discuss and Rejections of Community Demands

There was no rejection of the increase in property tax pushed by the municipalities, which the department head is willing to discuss, but there were rejections of two other demands. Marterbauer does not want to give the municipalities a share of the revenue from the bank levy or from CO2 taxation. Regarding the former, he argued that the municipalities had shown no interest in helping with bank bailouts, which the federal government had always had to shoulder. As for the CO2 tax, he needs the revenue because they are still dealing with the costs of the (now abolished) climate bonus.

The representatives of the Ministry of Finance justified the good performance of the federal government on the one hand with strict enforcement and on the other hand with a favorable development in tax and contribution revenues, which compensates for the slightly higher expenditures. The economy has also developed better than predicted in the spring. The autumn forecast of the economic researchers, which follows in October, could show that things are continuing in the right direction. According to Marterbauer, there are a number of indications that the economy is developing better than expected.

The data presented today is based on figures from the federal government for the first nine months and those from the states and municipalities from the first half of the year. Therefore, Marterbauer sees a certain uncertainty factor but remains optimistic about reaching 4.5 percent: "Our controlling reports suggest that we can achieve this." Updated forecasts for the year 2026 are to be presented in mid-October. Whether there will already be a civil servant agreement by then, which can be priced in accordingly, is open. Marterbauer did not want to comment on the status of the talks on Thursday but emphasized that a one percent increase would cost 189 million euros. He also did not want to comment on the stability pact or which states are having more difficulty with the budget than others.

Meanwhile, the third coalition partner continues to apply pressure. The reform spark ignited by the federal government must not be extinguished by the states, said NEOS budget spokeswoman Karin Doppelbauer. Austria must comply with the EU spending rule - and this can only be achieved if the federal government, states, municipalities, and social security show discipline in spending together. Once again, she also called for the public service salary agreement to be reopened.

(APA/Red)

This article has been automatically translated, read the original article here.