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Evangelos A. Calamitsis

For the latest thinking about the international financial system, monetary policy, economic development, poverty reduction, and other critical issues, subscribe to Finance & Development (F&D). This lively quarterly magazine brings you in-depth analyses of these and other subjects by the IMF’s own staff as well as by prominent international experts. Articles are written for lay readers who want to enrich their understanding of the workings of the global economy and the policies and activities of the IMF.


Financial statements based on historical costs increasingly depart from current values during an inflationary period and have distorting effects on the measurement of business profits. For this reason, periods of rapid inflation, especially following a major war or economic crisis, have been met in some countries by measures for the revaluation of business accounts for purposes of reports to shareholders and the determination of taxable income.

International Monetary Fund. European Dept.

KEY ISSUESContext: Austria did not experience a severe boom-bust cycle and came through thecrisis relatively well. The main impact was on the banking sector and public debt. With cyclical slack low and the recovery taking hold, this is the time to resolve crisis legacies and address long-standing structural issues.Outlook and risks: The recovery is taking hold, driven by a pick-up in exports. The most acute risks are mainly geopolitical and could in particular lead to financial spillovers.Financial sector policies: Bank restructuring should now be rapidly completed and bad asset disposal accelerated. Large internationally active banks should stand ready for further capital increases, and the EU banking union framework needs to be swiftly transposed at the national level.Public expenditure reforms: More decisive expenditure reforms in key areas such as pensions, health care, subsidies, and fiscal federalism would generate savings that could be used for both an accelerated debt reduction and lower labor taxation.Boosting potential output growth: Enhancing IT adaptation, improving the performance of the education system, facilitating access to financing for innovative start- ups, and reducing administrative barriers for new businesses would raise potentialgrowth and labor productivity.