IDEAS home Printed from
   My bibliography  Save this article

Mid-term Perspectives of the Austrian Budget Policy


  • Gerhard Lehner



Austria's budget policy is focused on the goal of achieving a balanced household for the general government by the year 2002. This goal includes the states (Länder) and communities and thus requires intense co-operation between territorial authorities. The reasons for a balanced household are, on the one hand, the wish to safeguard the inter-generation "contract" and, on the other hand, to secure some leeway for future budgets and to strengthen Austria as a business location. The study analyses government household management in 1999 and the budget for 2000. Both budgets provide keystones for mid-range budget policy. At present, budget policy is strongly focused on issues of balance rather than structure. In 1999, the total state deficit was 2.1 percent of GDP. The Länder and communities achieved a surplus of 0.3 percent of GDP, whereas the Federal government produced a deficit of 2.4 percent. For 2000, the budget projects a loss of 2.2 percent of GDP (by the national accounts concept), while the other territorial governments are assumed to have a surplus of 0.5 percent. Accordingly, the total loss will be 1.7 percent of GDP. Revenues in 1999 rose at a lower rate than GDP, a trend that will continue this year. The tax reform and the second stage of the "family package" will dampen federal revenues in 2000. The revenue quota, still at 26.7 percent in 1998, will decline to 25.2 percent in 2000. The expenditure quota declined even more sharply from 29.2 percent in 1998 to 27.2 percent in 2000. The decline of the expenditure quote applies across the board to all components with the exception of debt interest payments. Expenditure on interest payments rises faster than GDP (from 3.9 percent in 1998 to 4.1 percent in 2000). This trend makes it abundantly clear that new debt must be scaled down and interest payments reduced. Other areas also show interesting trends: the propensity to invest is falling off and, remarkably, social expenditure is rising at a lower rate. However, the decrease in the federal contribution to the pension insurance system in 2000 is due mainly to "once-only effects", which need to be replaced by the effects of the pension reform as of 2001. Compared to former years, the Federal government is exercising more restraint not only with respect to social expenditure but also regarding transfers to other public organisations and enterprises. Funding of the Federal budget depends on tax yields, which are growing at a weaker rate than GDP due to the tax reform. Revenues from wage tax this year will decline to 11.2 percent, the lowest value since 1997. For the goal of a balanced overall household to be accomplished in 2002, and provided that the other territorial authorities achieve a surplus of about ATS 30 billion (1 percent of GDP), and also provided that the increased yield from the tax measures effective as of the start of 2001 will accrue exclusively to the Federal government, it would be necessary for the latter to reduce its expenditure quota by another 1.3 percentage points by 2002.

Suggested Citation

  • Gerhard Lehner, 2000. "Mid-term Perspectives of the Austrian Budget Policy," WIFO Monatsberichte (monthly reports), WIFO, vol. 73(10), pages 601-615, October.
  • Handle: RePEc:wfo:monber:y:2000:i:10:p:601-615

    Download full text from publisher

    File URL:
    File Function: Abstract
    Download Restriction: Payment required

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. John McHale, 2001. "The Risk of Social Security Benefit-Rule Changes: Some International Evidence," NBER Chapters,in: Risk Aspects of Investment-Based Social Security Reform, pages 247-290 National Bureau of Economic Research, Inc.
    2. John Geanakoplos & Olivia S. Mitchell & Stephen P. Zeldes, "undated". "Would a Privatized Social Security System Really Pay a Higher Rate of Return?," Pension Research Council Working Papers 98-6, Wharton School Pension Research Council, University of Pennsylvania.
    3. Butler, M. & Kirchsteiger, G., 1999. "Aging Anxiety : Much Ado about Nothing?," Discussion Paper 1999-37, Tilburg University, Center for Economic Research.
    4. Bernd Raffelhuschen & Laurence J. Kotlikoff, 1999. "Generational Accounting around the Globe," American Economic Review, American Economic Association, vol. 89(2), pages 161-166, May.
    Full references (including those not matched with items on IDEAS)


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wfo:monber:y:2000:i:10:p:601-615. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.