Council Opinion of 22 January 2002 on the updated stability programme for Austria, 2001-2005
Date: 2002-01-22
Institutions: Council of the European Union
Subjects: Austria, Economic and Monetary Union, economic policy, economic stabilisation, gross domestic product

6.2.2002

EN

Official Journal of the European Communities

C 33/5

COUNCIL OPINION

of 22 January 2002

on the updated stability programme for Austria, 2001-2005

(2002/C 33/05)

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 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 22 January 2002 the Council examined the updated
stability programme for Austria which covers
the period
2001-2005.

The updated programme projects general government finances
to improve from a deficit of 1,1 % of GDP in 2000 to a
balanced position in 2001-2003, and to move to a small
surplus in the following years. The government gross debt is
expected to decrease from 61,8 % of GDP to slightly below the
60 % reference value in 2002 and further to 52,1 % in 2005.
The Council notes with satisfaction that, in spite of lower-than-
projected growth, the government deficit was reduced more
rapidly than projected,
i.e. one year ahead of the schedule
presented in the previous programme.

The Council welcomes
savings
measures, notably in the fields of pensions and public adminis-
tration, were realised in 2001; they contributed to bring down
the government accounts to balance in 2001 and will continue

important

structural

that

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

to impact positively on spending over the programme period.
This is in line with the Council’s recommendations in the
(cid:145)Broad economic policy guidelines(cid:146). The Council notes,
however, that the deficit reduction in 2001 relied heavily on
revenue side measures. As a consequence, the already high tax
burden in Austria has risen more strongly than anticipated,
thereby more than offsetting the effects of the 2000 income
tax reform.

The budgetary projections of the programme are based on a
macroeconomic scenario expecting annual output growth to
resume from its cyclical trough of 1,3 % in 2001 and 2002
to 2,4 % in 2003 and to increase further to 2,8 % in the
following years, amounting to an annual average growth of
2,25 % over the forecast period. The Council considers that
the expected growth is feasible given that no significant macro-
economic imbalances prevail and provided that social partners
continue their policy of setting wages in line with maintaining
international competitiveness.

The projected medium-term budgetary position of close to
balance or in surplus from 2001 onwards is in line with the
requirements of the stabiltiy and growth pact. Also in cyclically
adjusted terms these projections indicate that government
finances in Austris should be able to withstand a normal
cyclical downturn without breaching the 3 % of GDP
reference value for the deficit ratio.

The Council urges the Austrian authorities to ensure strict
budgetary implementation at all levels of government. This is
crucial to preserve budgetary balance, in particular in view of
uncertainties regarding the impact of the economic slowdown.
Moreover, at the level of the Bundesl(cid:228)nder expenditure cuts are
necessary to achieve the
surpluses
required by the national stability pact.

sustainable

structural

The Council considers that attaining a budgetary surplus in
2004-2005, as projected in the programme,
is appropriate
for Austria. A budgetary surplus in the medium term is
central
level decisively, which
appears necessary in view of
the long-term expenditure
pressures resulting from population ageing.

in bringing down the debt

C 33/6

EN

Official Journal of the European Communities

6.2.2002

The Council notes that the government finance projections rely
on a revenue-to-GDP ratio which is clearly higher than that of
most other Member States. Therefore, the Council encourages
the Austrian authorities to consider a stronger than planned
reduction in the revenue ratio, accompanied by an equivalent
reduction in the expenditure ratio. A decisive decline in the tax
burden, especially on labour, would be instrumental
in
rendering government finances more conducive to employment
and output growth. In the short-term, the Council invites the
Austrian Government to implement the reduction in non-wage
labour cost, already postponed by one year, as planned in
2003.

that

considers

furthermore

the Council

In particular,

the Austrian
The Council
Government should continue the ongoing structural reforms
and enhance its efforts in the pension system and the health
care sector, as recommended in the broad economic policy
the Austrian
guidelines.
Government
to consider measures with a view to further
raising the low effective retirement age and to encouraging
in particular of older workers
labour market participation,
and women. The Council also encourages
the Austrian
Government to continue with the reforms of product, labour
and capital markets, with a view to enhancing competition,
fostering the provision of risk capital and improving entrepre-
neurial dynamism.

invites

COUNCIL OPINION

of 22 January 2002

on the updated stability programme of Belgium, 2002-2005

(2002/C 33/06)

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 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 22 January 2002 the Council examined the 2001 update of
the stability programme of Belgium, which covers the period
2002-2005.

In 2000, real GDP growth was particularly strong, reaching
4 %, driven by domestic demand and buoyant exports; the

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

general government accounts reached a surplus of 0,1 % of
GDP ahead of schedule, while the government debt was
reduced by 5,7 % percentage points to 109,3 % of GDP.

In 2001, the economy suffered from the general economic
slowdown and real GDP growth decelerated to 1,1 %. The
initial general government budgetary target a surplus of
0,4 % of GDP (including the
from the UMTS
licences) could not be met in 2001, but a surplus of 0,2 %
of GDP was achieved; the government debt ratio is expected
to decline to 106,9 % of GDP.

receipts

The 2001 updated stability programme is based on a macro-
economic scenario assuming a sustained economic recovery
from the second quarter of 2002; real GDP growth is not
expected to exceed 1,3 % in 2002. Real GDP growth is
projected to accelerate in 2003 returning to potential in the
final years of he programme. Due to the 2001-2002 economic
slowdown
general
government balance in 2002 instead of a surplus of 0,3 % of
GDP which was projected in the previous update; then, from
the budgetary adjustment path is expected to be
2003,
resumed, a government
suplus of 0,5 % of GDP being
forecast for 2003, increasing to 0,7 % of GDP in 2005. The
government debt is projected to decline to 88 % of GDP in
2005 as expected in the previous update.

programme

updated

targets

the

a