Ministry of Finance Expects Budget Deficit of 4.5 Percent

The Ministry of Finance anticipates a deficit of 4.5 percent of GDP for this year. This figure will be submitted to Statistics Austria today, which will then forward these numbers to the European level. As the ministry emphasizes in a written statement, an EU deficit procedure is to be expected. This is because the allowed limit of three percent is clearly missed. However, it would be just below the 4.7 percent of the year 2024.

Details on the Projected Budget Deficit

The projected deficit for 2025 is divided as follows: Federal government: 3.5 percent, states and municipalities: one percent. The social insurance funds are expected to balance practically evenly. With the 4.5 percent, the Ministry of Finance's assessment is still slightly above that of the Fiscal Council, which recently projected the deficit at 4.4 percent of GDP. The ministry assumes a debt ratio of 84.7 percent. This corresponds exactly to the value that the Fiscal Council predicted last week.

The assumptions for the coming year have not yet been finalized by the government. These are to be presented only at the presentation of the double budget in mid-May.

The fiscal forecast of the Ministry of Finance is based on its own budget controlling and the department's tax estimate, as well as the financial forecasts of states, municipalities, and social insurance funds. The estimate also fully takes into account the government's planned consolidation measures. Without these measures, the deficit would even exceed five percent.

According to the Ministry of Finance, the persistently weak economy plays a central role in the size of the deficit. The recession leads to lower revenues from cyclical taxes such as corporate tax and higher expenditures, for example, due to increased unemployment. Also decisive are increased costs for interest as well as expenditure increases already agreed upon by the previous government.

EU Deficit Procedure Could Be Initiated

The Ministry of Finance assumes that, given the figures, an EU deficit procedure will be initiated, as in various other countries. However, the decision on this is expected to be made only in July in the Economic and Financial Affairs Council (Ecofin).

Finance Minister Markus Marterbauer (SPÖ) once again commits to maintaining the consolidation course through the agreed savings in the double budget 2025/26. The economy and employment should not be overly burdened. A mix of savings, tax increases such as those on banks, long-term reforms, efficiency improvements, and proactive measures should be implemented.

Step by step, everything will be done to reduce the national deficit: "This is a national effort." The finalization of the budget is being worked on intensively. The budget speech is scheduled for May 13. The double budget is to be approved in June. The size of the consolidation package - 6.4 billion this year and even 8.7 billion in 2026 - is not to change.

NEOS and Greens comment

Even the greatest efforts in saving would not be enough to sustainably put Austria's finances on a healthy footing, said NEOS club chairman Yannick Shetty in a statement. Even if the economy picks up again, there can be no return to old structures and mechanisms that contributed to the extent of the current crisis. Only in this way can we create room for genuine relief in the medium term. The figures concern everyone - that is, the federal government, states, and municipalities: "Therefore, we must look for potential further savings at all levels."

The figures underline the need for action but should not lead to misguided austerity measures, warns Green budget spokesman Jakob Schwarz. Right now, targeted investments in the future are needed, not austerity at the expense of the climate and economy. The massive increase in the budget deficit is not only due to the weakening economy but also to structural problems such as excessive state and municipal finances.

"Discussion on new taxes is opened"

Instead of counteracting, the government resigns and lets Austria stumble into an EU deficit procedure with open eyes, complained FPÖ budget spokesman Arnold Schiefer. The deficit figures now reported to Brussels are proof that the ÖVP has driven the country into a wall. The budget spokesman also fears that under the guise of consolidation, new burdens for the population are already being prepared: "The discussion on new taxes is thus opened."

(APA/Red)

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