COUNCIL OPINION of 18 January 1999 on the stability programme of Austria, 1998-2002
Date: 1999-01-18
Institutions: Council of the European Union
Subjects: Austria, budget policy, economic policy, economic stabilisation

17.2.1999

EN

Official  Journal  of  the  European  Communities

C  42/5

COUNCIL  OPINION

of  18  January  1999

on  the  stability  programme  of  Austria,  1998(cid:220)2002

(1999/C  42/04)

THE  COUNCIL  OF  THE  EUROPEAN  UNION,

Having  regard  to  the  Treaty  establishing  the  European
Community,

Having  regard  to  Council  Regulation  (EC)  No  1466/97
of  7  July  1997  on  the  strengthening  of  the  surveillance  of
budgetary  positions  and  the  surveillance  and  coordi(cid:220)
nation  of  economic  policies(cid:216)(˛),  and  in  particular  Article
5(1)  and  (2)  thereof,

Having 
Commission,

regard 

to 

the 

recommendation  of 

the

After  consulting  the  Economic  and  Financial  Committee,

HAS  DELIVERED  THIS  OPINION:

covers 

On  18  January  the  Council  examined  the  Stability
Programme  of  Austria  which 
the  period
1998(cid:220)2002.  The  Council  notes  with  satisfaction  that  the
programme  gives  detailed  information  on  the  expected
budgetary
development 
aggregates 
horizon.  The
budgetary  targets  for  1998  and  1999  are  based  on  the
budget  plans  for  these  years.  For  the  years  beyond  1999,
the  programme  does  not,  in  general,  provide  information
on  budgetary  measures  on  a  quantitative  basis.

of  macroeconomic 

programme’s 

over 

and 

the 

The  programme  envisages  a  decline 
in  the  general
government  budget  deficit  to  1,4(cid:216)%  of  (Gross  Domestic
Product)  GDP  by  2002,  while  the  gross  debt  ratio  is
expected  to  decrease  to  60(cid:216)%  of  GDP.  The  Council
notes  that  the  programme  builds  on  the  significant
budgetary  consolidation  during  the  years  1995(cid:220)1997.  The
significantly
Council  commends 
better  budgetary  outcomes  than  targeted.  However,  the
Council  regrets  that  in  1998,  in  spite  of  a  propitious
growth  environment,  no 
the
government  deficit  was  achieved.

the  achievement  of 

reduction 

further 

in 

The  programme  is  based  upon  a  macroeconomic  forecast
showing  a  deceleration  of  output  growth  from  the
current  high  rates  towards  growth  slightly  below  trend
by  the  end  of  the  projection  period.  The  Council
considers  that  this  scenario  appears  realistic  but  notes
that  a  downside  risk  exists  in  the  event  that  the  current
international  financial  and  economic  crisis  were  to  drag
on.

(˛)(cid:217)OJ  L  209,  2.8.1997,  p.  1.

for 

the 

expected 

thanks 
falling 

that 
increases  and 

The  programme  assumes 
to  continued
import  prices
moderate  wage 
inflationary  pressures  will  remain  low.  The  Council  notes
that 
combination  of  growing
employment,  falling  unemployment  and  continued  low
inflation  to  materialise  further  structural  improvements  in
be 
labour  markets  will 
product 
required.
Furthermore, 
competitiveness
of 
indicators  would  have  to  be  closely  monitored  and
structural  reforms  fostering  Austria’s  competitive  position
should  be  continued.

the  development 

and 

in 

The  Council  considers  it  appropriate  that  the  budgetary
consolidation  envisaged  in  the  programme  is  achieved  by
a  decrease 
the  revenue  ratio  outweighed  by  a
reduction  in  the  expenditure  ratio.  The  Council  notes,
however,  that  the  overall  objective  of  a  reduction  in  the
general  government  deficit  by  0,8(cid:216)%  of  GDP,  and  in  the
gross  debt  ratio  by  4,4(cid:216)%  of  GDP  between  1998  and
2002  is  very  modest.

The  Council  acknowledges  that  due  to  a  low  variability
of  output  growth  in  Austria  the  envisaged  medium(cid:220)term
deficit  target  of  1,4(cid:216)%  of  GDP  would  be  sufficient  to
allow 
in  a  normal  cyclical  downturn  the  automatic
stabilisers  to  work  without  risk  of  breaching  the  3(cid:216)%  of
GDP  reference  value.  The  Council  concludes  that  in  this
sense,  the  programme  is  in  line  with  the  provisions  of  the
Stability  and  Growth  Pact.

insure  against  unforeseen  developments 

The  Council  notes,  however,  that  the  budgetary  strategy
adopted  by  the  Austrian  Government  appears  risk(cid:220)prone
as  it  does  not  provide  for  any  additional  safety  margin.  A
more  ambitious  deficit  target  would  have  been  appro(cid:220)
in
priate  to 
economic  activity  and 
in  public  finances,  to  provide
room  for  manoeuvre  for  the  potential  use  of  discre(cid:220)
tionary  counter(cid:220)cyclical  budgetary  policy  as  well  as  for
for
implementation  of  active  policy  measures 
the 
employment  creation  and  of  other  structural  policies  in
line  with  the  Employment  Guidelines,  and  to  secure  a
faster  decline  in  the  debt  ratio  in  view  of  the  longer(cid:220)term
financial  burden  arising  from  population  ageing.

therefore, 

encourages 

to  execute 

the  Austrian
The  Council, 
Government 
the  1999  budget  plan  as
rigorously  as  possible  and  ensure  that  the  debt  ratio  is
firmly  kept  on  a  downward  path.  For  the  years  beyond
1999,  the  Council  invites  the  Austrian  Government  to  do
its  utmost  to  overachieve,  as  in  the  past,  the  budgetary

C  42/6

EN

Official  Journal  of  the  European  Communities

17.2.1999

targets  set  in  the  stability  programme,  thereby  widening
the  safety  margin  with  a  view  to  minimising  the  risk  of
breaching  the  3(cid:216)%  of  GDP  reference  value.

The  Council  welcomes  the  planned  structural  reform
measures  that  are  outlined 
in  the  programme.  The
general  thrust  of  the  reform  measures  appears  appro(cid:220)
priate  and  in  keeping  with  the  Council  Recommendation
of  6  July  1998  on  the  broad  guidelines  of  the  economic

policies  of  the  Member  States  and  of  the  Community(cid:216)(˛).
The  Council  urges  the  Austrian  Government  to  finance
reform  measures  entailing  additional  government  outlays
by  savings  in  other  areas.  The  Council  encourages  the
Austrian  Government  to  implement  the  reforms  rapidly
and  determinedly  as  this  will  be  a  key  element  in  the
achievement  of  the  goals  set  in  the  stability  programme.

(˛)(cid:217)OJ  L  200,  16.7.1998,  p.  34.