It is not just the help for households and businesses and the elimination of cold progression. Much higher spending on pensions and interest will also weigh on the next and subsequent budgets.
It is inevitable that Austria will take on new debts: this year it is about 24 billion euros, for 2023 Finance Minister Magnus Brunner estimated 17 billion euros. It is extremely uncertain whether it is really possible to get back “on the budget path” in 2026 (see forecast in the graph).
Even if we succeed, our national debt will grow to 400 billion euros in the coming years. However, the debt ratio, or the share of GDP, is falling from 78 percent this year to 72 percent. This is because nominal GDP is growing faster than debt due to high inflation.
So visually it looks like the debt is partially “inflated” as it falls relative to GDP. But rising interest rates are worrying. In 2023, they will increase from the previous 4.3 to almost 9 billion euros. Austria currently pays only an average of 2.5 percent for its government bonds, and most of them have long maturities.
Payroll and sales taxes – the state’s main revenues – will yield 6 and 9.5 percent more in 2023, respectively, despite the economic slowdown and the elimination of the cold progression. Because the higher prices and the expected higher wage agreements automatically lead to higher tax revenues.
25 billion euros for pensions
State subsidies for pensions increase by 2.7 billion euros to 25 billion euros. Eleven billion of this goes to civil servants’ peace and about 14 billion euros as a subsidy for ASVG pensions and unemployment benefits. Agenda Austria criticizes that almost every fourth budget euro has to be spent on this.
Many costs in 2022 and 2023 are one-off payments, such as the anti-inflation packages or the expenditure on the strategic gas reserve. But as we saw this year, that could change quickly.
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.
