Fiskalrat: Government's Budget Target Likely to Hold

According to a quick estimate presented on Wednesday, the Fiscal Council expects a budget deficit of 4.4 percent of GDP this year, with 4.2 percent forecasted for the coming year. This confirms the Finance Ministry's forecasts of 4.5 and 4.2 percent, respectively. To control long-term spending dynamics, the Fiscal Council calls for structural reforms.

Fiscal Council sees savings target for 2026 achievable without further measures

Compared to its spring forecast (4.3 and 4.1), the Fiscal Council's expectation for the current and the coming year has slightly worsened. Although improved economic forecasts increased projected government revenues by 0.3 percent of GDP, these can only partially compensate for the growing government expenditures. According to the Fiscal Council, the persistently high expenditure ratio is due to entrenched effects of crises, inflation, and demographic developments, which lead to increased spending, especially in the social and health sectors.

The consolidation volume targeted by the government of 6.3 billion euros this year is likely to be undercut by around 700 million euros, according to the Fiscal Council. In contrast, the savings target of 8.7 billion euros for the coming year is already achievable with the implemented measures, although some of the planned measures, such as the subsidy task force or the anti-fraud package, have not yet been sufficiently specified. The main reason for this is the newly negotiated civil servant salaries - provided that these are adopted by federal states and municipalities.

Badelt "slowly impatient" due to lack of structural reforms

In the long term, however, the stabilization of the national debt ratio is far from being achieved, warned Fiscal Council Chairman Christoph Badelt during the presentation of the budget outlook. Without structural reforms, "this devilish self-escalation mechanism in expenditures cannot be controlled," he expressed being "slowly impatient" with the government. In the negotiations for the reform partnership, a clearer commitment from the government on which reforms should be implemented is needed. He also urged more speed in the stability pact negotiations. The federal government, state governments, and municipalities should do everything possible to prevent inflation from rising further, even if this is difficult while simultaneously consolidating the budget, said Badelt.

Finance Minister Markus Marterbauer (SPÖ) felt confirmed by the budget forecast on Wednesday, as he explained to "Ö1". The Finance Minister now sees the federal states and municipalities as being called to action, stating they must "make significantly more effort." He agreed that long-term structural reforms are necessary, referring to the reform partnership. The pink coalition partner also passed the ball to the states and municipalities. "We NEOS are doing everything to ensure that the reform spark we ignited at the federal level is not extinguished by the states and municipalities. The federal government alone cannot fix it," explained budget spokesperson Karin Doppelbauer in a statement, calling for "a joint effort."

The Freedom Party also felt confirmed by the Fiscal Council's office, but in their criticism of the "clearly not ambitious enough" recovery path of the black-red-pink government. The goal must be to reduce the deficit to below three percent before 2028, said FPÖ budget spokesperson Arnold Schiefer in a statement, calling for a reduction in administrative expenses through socially acceptable staff cuts in the public sector and a reduction in bureaucracy. The Greens demanded finally major reforms in "federalism, in the health sector, but especially in climate-damaging subsidies." The government must also provide clarity and predictability with a reform roadmap, said Green budget spokesperson Jakob Schwarz.

(APA/Red)

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