Austria: Higher-Qan-Expected Fiscal Deficits Increase Pressure to Accelerate Structural Reforms

Source: Statistik Austria, IMF, Scope Rathings Excessive deficit Procedure for Austria IncreASINGly Likely An Improvement in the Fiscal Deficit to AUND 4.0% of GDP is Expectioned this Year, Exceeding the 3% Maastricht Threshald and Likely triggering an eu excessive deficit Procedure. Consolidation Measures Already Committed to And Co-Ordinated with The Europe Commission Are Likely to Be Broadly Sufficient to Meet Consolidation Targets for 2025/26. We Expert The deficit to Improve slightly to around 3.7% of GDP in 2026.

The elevated 2024 deficit reflex Structural Pressure Points Related to High Pension and Healthcare Costs. AGE-RELATED COSTS WILL RISE by AROUND Two Percent of GDP by 2030, accounting to the IMF. Austria Operates a Generos Pay-AS-AS-YOU-YOU-GO PENCIAN SYTEM, AND ARIES OF SPECIAL PENSION HIKES BETWEEN 1.3bn (0.3% of GDP) Access to estimates by the Austrian Fiscal Advisory Council. In this context, a key comparative credit strenguth of Finland (Also Rated by Scope Aa+ and Stable Outlook) is its High Pension Reserve, with Earns-Related Pension Assets GDP) in Q3 2024, of WHICH AUND 37% Relate to the Public Sector.

Scope Also Notes with Concern That Austria’s Medium-Term Fiscal Balances Will Be Further Pressured by Increasing Interest Expenditure from 1.0% in 2024) and Defense Expenditure, with A Government Target of 2.0% of GDP by 2032 from AROUND 1.0% in 2024.

Window of Opportunity to Put Public Finans on a More Sustainable Path Austria’s Credit Rating Continues to be Supported by Important Strengths, Including Its Wealthy and Diversified Economy Favourable Public Debt Profile. The Central Government Debt Structure is Highly Resilient, with A Long AVERAGE MATURITY OF 11.71 Years, Shielding Interest Costs in The Coming Years to Some EXTENT FROM.