(9)

Based on the assessment of the Stability Programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that Austria undertook considerable consolidation efforts to bring the budget on a path to correct the excessive deficit. With regard to the Stability Programme, the macroeconomic scenario underpinning the budgetary projections is optimistic. The main objective of the budgetary strategy outlined in the Stability Programme is to gradually reduce the general government deficit to reach a balanced budget in nominal terms by 2016 and to meet the medium-term objective (MTO) by 2017. The Stability Programme confirms the previous MTO of a structural deficit of 0,45 % of GDP. The MTO is in line with the requirements of the Stability and Growth Pact. Based on current projections, Austria is on track to correct its excessive deficit by 2013 given that the general government deficit is at 2,5 % of GDP in 2012 and is expected to further decrease to 2,2 % of GDP in 2013 and to 1,8 % of GDP in 2014 according to the Commission services forecast. However, there are possible additional costs relating to the unwinding of a large bank which could have a significant deficit-increasing impact. After a strong improvement exceeding the adjustment path required in the excessive deficit procedure (EDP) in 2012, the structural balance deficit is projected to increase in 2013 up to 1,8 %. A slight increase of the structural deficit in 2013 is confirmed also by the Commission services forecast. According to the information of the Stability programme from 2014 onwards, the recalculated structural balance foresees a structural adjustment exceeding 0,5 % in 2014 and 2015 that could enable Austria to reach the MTO 2 years in advance in comparison to the scenario presented in the Stability Programme, namely in 2015 instead of 2017. As for the expenditure benchmark of the Stability and Growth Pact according to the information provided in the Stability Programme the growth rate of government expenditure, net of discretionary measures, over years 2014 and 2016 is expected to contribute to an annual structural adjustment towards the MTO by 0,5 % of GDP. However, the projected significant decline in the expenditure/GDP ratio in the Stability Programme scenario is very ambitious since expenditure is estimated to attain in terms of GDP one of the lowest level in more than 15 years. Austria can be expected to be in transitional period from 2014 to 2016 regarding compliance with the debt criterion and plans would ensure sufficient progress towards compliance. The strengthening of the budgetary framework has left the fiscal relations between layers of government largely unchanged and overlapping responsibilities and inconsistencies between funding and spending responsibilities remain a challenge. The complex mechanism of continuous agreements between the national government, social insurance providers and the sub-federal level, constitute an implementation risk to measures aimed at containing health expenditure. In education, the negotiations on a 6-point proposal including the abolition of school authorities at district level are a welcome step towards streamlining of responsibilities between different layers of government, but further simplification would be needed to reduce fragmentation more substantially.