Finance Minister Magnus Brunner (ÖVP) will present his first budget on Wednesday. On the one hand, this is heavily burdened by high debts that have been built up in recent pandemic years due to the generous Corona aid, and the sharp rise in interest rates. Added to this are multi-billion dollar combat packages, massive inflation and stagnant economic growth. All this will be felt in the 2023 budget.
Maastricht’s deficit will be just under three percent of economic output (gross domestic product/GDP) next year and is expected to fall to 1.6 percent by 2026. Debt rises to EUR 367 billion, but the share of gross domestic product fell slightly from 78.3 to 76.7 percent. Interest charges will rise from 4.3 to nearly nine billion euros in 2023. The long years of cheap debt are over.
The ECB’s interest rate hikes in the fight against inflation have already massively increased the cost of Austria’s debt this year. In January, Austria paid 0.09 percent for ten-year bonds, the current rate is 2.68 percent.
“Cost of debt increased”
The Minister of Finance has set himself the target of reducing the debt to 70 percent of GDP in the coming years. This is necessary as the outlook for Austria is being looked at more critically and “that increases the cost of our debts,” Brunner said recently.
Given the difficult economic situation and the escalating war in Ukraine, the budget is full of uncertainty. Inflation will not only remain high in 2023 and the economic outlook will be clouded. The development of energy prices is an important factor of uncertainty.
Critics accuse the government of doing too little to curb inflation and relying too much on emergency measures. The abolition of cold progression alone will cost the state 1.5 billion euros in 2023.
Video: More money there‘s (also) for the military
Inflation affects all budgetary areas
At the same time, inflation is reflected in all budget areas: federal employee salaries, pensions, material expenses, and all purchases. For pensions alone, 2.7 billion euros more will be budgeted next year, the health care reform 0.8 billion euros and in 2024 almost 500 million euros more for foreign affairs and asylum. In view of the war in Ukraine, there is certainly more money for the army (see video above).
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
