Austria's Budget: Surplus, Deficit, Or Perfectly Balanced?

In November 2011, the Austrian coalition government tried to amend its constitution to introduce a German-style debt brake, which would have forced the government to reduce its debt level to 60% of gross domestic product (GDP) by 2020. However, the government failed to gain a two-thirds majority in support of the constitutional amendment. Another attempt was made in October 2019, which was also unsuccessful. According to Statistics Austria, the general government Maastricht balance for 2023 amounts to Euro -12.7 bn or -2.7% of GDP, which is an improvement of Euro 2.0 bn or 0.6 percentage points compared to 2022. This means that the Maastricht deficit limit of 3.0% of GDP was met in 2023 for the first time since 2019, following the COVID-19 and energy crises.

Austrian government debt

The Austrian government's debt increased by €20.4 billion in 2023, with a net financing deficit of €8.0 billion. The Maastricht debt level at the end of 2023 was €371.1 billion, with a debt ratio in relation to GDP of 77.8%. This is projected to fall to below 77% of GDP by the end of 2027.

In 2011 and again in 2019, the Austrian coalition government attempted to amend the constitution to include a "debt brake", which would have forced the government to reduce its debt level to 60% of GDP. Both attempts failed to gain a two-thirds majority.

Maastricht deficit limit

The Maastricht deficit limit is a key component of the Maastricht criteria, which are the convergence criteria that EU member states must meet to adopt the euro as their currency and enter the third stage of the Economic and Monetary Union (EMU). The Maastricht Treaty, signed in February 1992, outlines these criteria, which are designed to achieve price stability within the eurozone.

The Maastricht deficit limit sets a reference value for the government sector deficit of EU member states, stating that it should not exceed 3% of gross domestic product (GDP) for any given year. This is known as the fiscal criterion or the deficit criterion. The limit is part of the Stability and Growth Pact, which serves as a framework to ensure price stability and fiscal responsibility across the EU.

If a member state's expenditure exceeds its revenue, resulting in a deficit, this value must not surpass the 3% limit. However, there are exceptions to this rule. Firstly, if the deficit has been declining substantially and continuously before reaching close to the 3% limit, or if the excess is small and caused by exceptional, temporary circumstances such as a significant economic downturn or the implementation of positive economic reforms.

Austria met the Maastricht deficit limit in 2023, with a general government Maastricht balance of -2.7% of GDP, an improvement from 2022. The Austrian government intends to maintain this course in the coming years, with forecasts showing a slight decline in the deficit as a percentage of GDP from 2024 to 2027.

Austrian federal budget reform

In 2011, the Austrian coalition government attempted to amend the constitution and introduce a "debt brake", which would have forced the government to reduce its debt level to 60% of GDP by 2020. However, they failed to gain a two-thirds majority to support this constitutional amendment. Another attempt was made in 2019, which was also unsuccessful.

The Austrian Federal Budget Reform is focused on addressing the medium to long-term challenges facing Austrian society, such as demographic change, security, and dealing with climate change. The 2024-2027 budget reflects these priorities, with financing costs expected to double from 0.9% to 2.0% of GDP between 2022 and 2027.

The federal deficit is projected to decrease from €20.9 billion in 2024 to €16.9 billion by 2027. Despite budgetary pressures, the general government Maastricht deficit is expected to remain below 3.0% of GDP from 2024 to 2027, meeting the requirements of the Maastricht criteria. The public debt ratio is also expected to remain stable or decline to below 77% of GDP by the end of the planning period in 2027.

The Austrian Federal Budget Reform aims to balance the budget by addressing key societal challenges while maintaining fiscal discipline and adhering to the Maastricht criteria.

Austrian budget execution in 2023

Austria's budget execution in 2023 was informed by the country's budgetary forecast for the period 2022-2060, which is published every three years by the Minister of Finance. The Austrian government aimed to halve its budget deficit to ensure a sustainable budget path in the medium term.

The provisional net financing balance of the federal government in 2023 was €-8.0 bn (deficit), outperforming the federal budget plan for 2023 by €9.1 bn. Lower expenditures and higher revenues contributed to this improvement. Expenditure reduction resulted from lower spending related to the energy crisis, COVID-19 crisis management, underruns due to the economic situation, lower interest payments, and other decreased budget requirements. Higher revenue, on the other hand, was primarily driven by the economic situation and higher cash inflows from dividends and liquidations.

The Maastricht debt level at the end of 2023 stood at €371.1 bn, with a debt ratio of 77.8% of GDP, a slight decline from 2022. The Maastricht deficit limit of 3.0% of GDP was achieved in 2023, marking an improvement from the previous year and the energy and COVID-19 crises.

The Austrian Federal Budget for 2024, approved by the Council of Ministers on October 18, 2023, reflects challenges such as demographic change, security, and addressing climate change. The federal deficit is projected to decrease from €20.9 billion in 2024 to €16.9 billion by 2027. Despite budgetary pressures, the general government Maastricht deficit is expected to remain below 3.0% of GDP through 2027.

Austrian coalition government's attempt to amend the constitution

Austrian politics operates within the constitutional framework of a federal semi-presidential republic. The country's constitution, the Federal Constitution of Austria, is split across multiple acts, with the Federal Constitutional Law (Bundes-Verfassungsgesetz) at its centre.

Austrian coalition governments have amended the constitution many times over the years. The country has been governed by multiple constitutions, including the Pillersdorf Constitution in 1848, the "irrevocable" Stadion Constitution from 1848 to 1851, the October Diploma in 1860, and the February Patent from 1861 until 1865. The B-VG was first enacted on October 1, 1920, and has been heavily modified since.

In 1929, the constitution was revised to broaden the prerogatives of the president. The president would now be elected directly by the people and vested with the authority to dissolve parliament, formally appoint the chancellor and cabinet, and dismiss the whole cabinet or certain ministers.

In 1934, the ruling Christian Social Party replaced the constitution with a new basic law defining Austria as an authoritarian corporate state. This Austrofascist constitution was in force until Austria was annexed by Nazi Germany in 1938. The Austrian Constitution was reinstated on May 1, 1945, after Austria re-established itself as an independent republic.

The Austrian Constitution is relatively easy to change. All that is required is a two-thirds majority in the National Council. A confirmation by referendum is only required in the case of a fundamental change to the constitution.

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