Council Opinion of 8 May 2000 on the updated stability programme of Austria for the period 2000 to 2003
Date: 2000-05-08
Institutions: Council of the European Union
Subjects: Austria, EU programme, economic stabilisation

10.6.2000

EN

Official Journal of the European Communities

C 162/1

I

(Information)

COUNCIL

COUNCIL OPINION

of 8 May 2000

on the updated stability programme of Austria for the period 2000 to 2003

(2000/C 162/01)

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 strenghthening of the surveillance of budgetary
positions and the surveillance and coordination of economic
policies (1), and in particular Article 5(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 8 May 2000 the Council examined the updated stability
programme for Austria which covers the period 2000 to 2003.
The Council notes with satisfaction that
the new Austrian
government was able, despite the relatively short time available,
to present a programme update which is based on the draft
budget
for 2000 and gives detailed information on the
expected developments of macroeconomic and budgetary
aggregates up to the programme’s horizon. The Council
targets agreed in the
welcomes
the deficit
in 1998 and 1999.
original stability programme were met
However, growth was above trend in the period 1998 to
1999, even though somewhat below what was anticipated in
the original stability programme. Therefore, the Council regrets
that no further headway in budgetary consolidation was made
during this period. The Council notes, moreover, that the debt
ratio, which is still above the 60 % reference value, increased in
1999.

the fact

that

The updated programme envisages a decline in the general
government budget deficit from 2,0 % of GDP in 1999 to
1,3 % of GDP by 2003, while te gross debt ratio is expected
to decrease from 64,9 % of GDP to 61,2 % over the same
period. These projections are based on a macroeconomic
scenario expecting output growth to fall gradually from its
current cyclical peak of 2,8 % to 1,9 % by 2003, amounting
to annual average growth of 2,5 %, i.e. slightly above trend. In
view of the good supply and demand conditions at present in
the Austrian
external
and
environment,
such a growth
outlook appears feasible without igniting inflationary pressures,
as assumed in the programme.

the
the Council considers

favourable

economy

that

The Council notes that
the new Austrian government has
maintained the targets for the general government balance as
set out in the original programme until 2002. The Council
regrets, however, that the goal of attaining the 60 % of GDP
reference value for
the gross consolidated debt has been
postponed by three years to 2005. The Council recalls that
in its opinion on the original programme (2) it recommended
that a more ambitious consolidation of government finances be
pursued. The Council acknowledges that, owing to the former
government’s decision on a substantial reform of income taxes
and family benefits taking effect in 2000, budgetary consoli-
dation has been made more challenging. The Council notes,
however, that, to meet the cost of this reform, the updated
programme resorts heavily to one-off measures in each of
the years covered by the programme. The Council emphasises
that the necessary sustainable reduction in the government
deficit cannot be achieved on a lasting basis by these
the Council considers that, net of
measures.
these measures,
envisaged medium-term government
deficit in the updated stability programme is not fully in line
with the requirements of the Stability and Growth Pact, as it
does not give a large enough safety margin to prevent the
deficit from breaching the 3 % of GDP reference value in the
eventu of cyclical downturn.

In addition,

the

(1) OJ L 209, 2.8.1997, p. 1.

(2) OJ C 42, 17.2.1999, p. 5.

C 162/2

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Official Journal of the European Communities

10.6.2000

invites

the Council

the Austrian government

The Council therefore urges the Austrian government to reduce
the deficit targets in the next update of the programme. In
addition,
to
revert to its original goal for the government debt ratio to
attain the 60 % of GDP reference value by 2002. To prepare
the ground for such a revision,
the Austrian government
should aim at a better deficit outcome than projected in
2000, especially if growth should turn out higher
than
expected. All levels of government are called upon to achieve
better budgetary outcomes than planned. Special attention
the
must be given to the budget
for 2001. Most notably,
one-off revenue measures, on which the attainment of
the
replaced by permanent
deficit
should be
measures,
from 2001
expenditure
onwards. In this context, the Council notes that the statistical
treatment of real estate sales is still under consideration by
futher
Eurostat. Furthermore, any additional
revenue
the
those
programme in the years 2001 and beyond, should be made
contingent on expenditure savings in other areas.

spending or
envisaged

relies,
prioritising

reductions,

including

savings,

targets

in

The Council considers that, to achieve the aim of a sustained
consolidation of government finances, wide-ranging structural
reforms, as outlined in the programme, are essential.
In
particular, the public sector reform as well as reforms in the
transfer and benefit systems should be pursued with deter-
mination. Moreover,
the upcoming
negotiations on the financial equalisation scheme between the
federal government
should be
undertaken better to align the competencies for taxing and
spending.

in the framework of

and the

regions,

efforts

The Council considers the planned structural reform measures
outlined in the programme to be key measures for the required
improvement in the functioning of product and labour market.
The general thrust of these reforms appears appropriate and in
keeping with the Broad Guidelines for the Economic Policies of
and the Community. The Council
the Member
these
encourages
reforms with determination.

the Austrian government

to implement

States