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The Eurosystem Secures Price Stability<br />
Austrian general<br />
government deficit<br />
comes to 1.3% in<br />
<strong>2004</strong><br />
Update of the<br />
Austrian stability<br />
program<br />
Budgetary developments in<br />
Austria<br />
Based on the figures provided by Statistics<br />
Austria (March 2005), the general<br />
government deficit (Maastricht<br />
definition) came to 1.3% of GDP in<br />
<strong>2004</strong>, substantially below the euro<br />
area average of 2.7% of GDP. The<br />
public deficit rose by 0.2 percentage<br />
point of GDP from the 2003 result. 1<br />
Expenditure cuts did not suffice to<br />
offset the decline in the revenue ratio<br />
that was triggered, above all, by<br />
shrinking income and wealth tax revenues<br />
(which reflect, inter alia, the<br />
effects of the first stage of tax reform<br />
and anticipation effects of the second<br />
part of the tax reform scheduled for<br />
2005) and contracting value added<br />
tax receipts. Expenditure growth<br />
Fiscal Convergence Criteria for Austria<br />
% of GDP<br />
The goal is a balanced budget in<br />
2008. Especially in 2005 and 2006,<br />
fiscal stimulus packages, a Ògrowth<br />
andlocationpackageÓandmostof<br />
all tax reform will cause the deficit<br />
slowed mainly as a result of the pension<br />
reform already implemented and<br />
the administrative reform measures<br />
taken so far (including personnel reductions).<br />
However, the effect of<br />
these consolidation measures was<br />
dampened by the residual effects of<br />
child-care benefit payments and<br />
higher social security spending (automatic<br />
stabilizers). 2<br />
The update of the Austrian stability<br />
program for <strong>2004</strong> to 2008 of<br />
November 30, <strong>2004</strong>, has three aims:<br />
First, achieving a general government<br />
budgetary position which is in balance<br />
over the business cycle; second,<br />
reducing the tax-to-GDP ratio to<br />
40% by 2010; and third, boosting<br />
growth potential by investing in research,<br />
education and infrastructure.<br />
2003 <strong>2004</strong> 2005 2006 2007 2008<br />
Final<br />
Budget<br />
Account<br />
Outturn Stability program 1<br />
Receipts 2 49.5 49.4 47.5 46.2 46.0 45.8<br />
Expenditure 2 50.6 50.5 49.5 48.0 46.7 45.8<br />
Budget balance 2 1.1 1.2 1.9 1.7 0.8 0.0<br />
Interest expenditure (net) 3.2 3.2 3.1 3.1 3.0 2.9<br />
Primary expenditure 47.4 47.3 46.4 44.9 43.7 42.9<br />
Primary surplus 2.1 2.0 1.2 1.3 2.2 2.9<br />
Cyclically adjusted budget balance 0.4 0.5 1.5 1.5 0.7 0.0<br />
Cyclically adjusted primary surplus 2.8 2.7 1.6 1.6 2.3 2.9<br />
Debt ratio 64.7 64.2 63.6 63.1 61.6 59.1<br />
Tax ratio 3 42.8 42.8 41.6 40.5 40.3 40.0<br />
Source: Federal Ministry of Finance, Statistics Austria.<br />
Note: Discrepancies may arise from rounding.<br />
1 Update of November 30, <strong>2004</strong>.<br />
2 Swaps shown net.<br />
3 Direct taxes, indirect taxes, social security contributions excluding imputed contributions,<br />
inheritance taxes.<br />
ratios to swell. Nevertheless, these<br />
measures will not jeopardize the 3%<br />
deficit target at any time. From<br />
2006, the reduction in the general<br />
government deficit will result nearly<br />
1 The value for 2003 was revised downward from 1.3% to 1.1%.<br />
2 Automatic stabilizers are cyclical changes in tax revenues (especially income tax revenues) and public spending<br />
(mainly on unemployment insurance) which have a positive impact on GDP.<br />
30 ×<br />
<strong>Annual</strong> <strong>Report</strong> <strong>2004</strong>
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