Front Matter

Front Matter Page

© 2009 International Monetary Fund

September 2009

IMF Country Report No. 09/295

Austria: 2009 Article IV Consultation—Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Austria

Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2009 Article IV consultation with Austria, the following documents have been released and are included in this package:

  • The staff report for the 2009 Article IV consultation, prepared by a staff team of the IMF, following discussions that ended on June 30, 2009, with the officials of Austria on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on August 4, 2009. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

  • A staff statement.

  • A Public Information Notice (PIN) summarizing the views of the Executive Board as expressed during its September 9, 2009 discussion of the staff report that concluded the Article IV consultation.

  • A statement by the Executive Director for Austria.

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

700 19th Street, N.W. • Washington, D.C. 20431

Telephone: (202) 623-7430 • Telefax: (202) 623-7201

E-mail: • Internet:

International Monetary Fund

Washington, D.C.

Front Matter Page



Staff Report for the 2009 Article IV Consultation

Prepared by the Staff Representatives for the 2009 Consultation with Austria

Approved by Juha Kähkönen and Martin Mühleisen

August 4, 2009

Executive Summary

Focus. The report is focused on the impact of the financial crisis on the Austrian economy and financial sector, the authorities’ policy responses, and macro-financial linkages and spillovers.

Background. After a string of strong years, Austria’s open economy started to slow down in 2008. As a result of this and a generous stimulus package, consisting mostly of lasting tax cuts, deficits and debt are expected to rise and remain high in the medium term. The Austrian banking system is strongly exposed to Central, Eastern, and Southeastern Europe (CESE). The authorities have been implementing a large banking stabilization package, including public capital injections and guarantees.

Outlook. The economy is projected to shrink considerably in 2009, with a recovery expected to start in 2010. Exports and investment declined strongly already, and more recently consumption has been affected as well. Inflation is expected to remain low this year, with a slight increase in 2010. The uncertainties surrounding the outlook are considerable.

Key policy issues. The two main challenges for the authorities looking forward are:

  • To ensure financial stability during a period of shocks to the financial sector. Based on recent stress tests—which showed that systemic banks would not breach minimum capital requirements under shocks—the authorities do not see a need for further capital injections at this stage. They are, however, closely monitoring conditions in the financial sector. The staff report emphasizes that ratios well above regulatory minima are needed to support the markets’ confidence in the banks. It recommends that the authorities use the tests as input for discussions with the banks about strengthening capital buffers, when needed. The banks’ strategy of maintaining their presence in CESE will have positive spillovers for regional economic activity and stability, provided the risks are well-managed. This will require close collaboration between home and host authorities and adequate contingency planning. The authorities are committed to this.

  • To support the economy through responsible fiscal policy. The approved stimulus, while supporting the economy in the short run, is neither targeted nor temporary, and may therefore become a threat to fiscal sustainability. The report recommends the development of a credible exit plan, aimed at structural fiscal consolidation over the medium term, to be prepared this year and implemented once the economy stabilizes. The focus should be on identifying expenditure saving measures. The authorities agreed with the need for consolidation, but warned against a premature exit from the stimulus.


  • Executive Summary

  • I. Context

  • II. Recent Economic Developments and Outlook

  • III. Macro-Financial Linkages

  • IV. Fiscal Policy

    • A. Fiscal Developments and Outlook

    • B. Fiscal Sustainability

    • C. Structural Fiscal Issues

  • V. Financial Sector

    • A. The Authorities’ Response to the Crisis

    • B. CESE Exposures—Risks and Strategy

    • C. Insurance and Pensions

    • D. Regulatory Initiatives

  • VI. Staff Appraisal

  • Text Boxes

  • 1. Austrian Fiscal Stimulus Measures in 2008-09

  • 2. Financial Sector Support Measures

  • 3. The ANB’s Stress Tests

  • 4. European Bank Coordination Initiative (“Vienna Initiative”)

  • Figures

  • 1. Economic Developments

  • 2. GDP Growth and Leading Indicators

  • 3. Inflation and Labor Market

  • 4. Competitiveness

  • 5. The Role of the Financial Sector in the Economy

  • 6. The Financial Sector’s Contribution to Growth

  • 7. Household Balance Sheets

  • 8. Monetary Conditions

  • 9. Fiscal Trends

  • 10. Banks’ CESE Exposure

  • 11. Banking System

  • 12. Selected Financial Market Indicators

  • Tables

  • 1. Basic Data, 2005-10

  • 2. Medium-Term Macroeconomic Framework, 2005-14

  • 3. Balance of Payments, 2005-14

  • 4. General Government Accounts 2005-14

  • 5. Financial Soundness Indicators, 2005-09

  • 6. Major Banks’ Ratings Changes, 2008-09

  • Annexes

  • 1. Western Banks’ Exposures to Eastern Europe: Interpreting the BIS Data

  • 2. Regulatory Reform Priorities in Austria

Front Matter Page



Staff Report for the 2009 Article IV Consultation—Informational Annex

Prepared by the Staff Representatives for the 2009 Consultation with Austria

(In Consultation with Other Departments)

August 4, 2009


  • I. Fund Relations

  • II. Statistical Issues

Front Matter Page

Public Information Notice (PIN) No. 09/120


September 21, 2009

International Monetary Fund

700 19th Street, NW

Washington, D. C. 20431 USA

On September 9, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Austria.1

Austria: 2009 Article IV Consultation-Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Austria
Author: International Monetary Fund