Austria: Staff Report for the 2015 Article IV Consultation—Informational Annex
Author: International Monetary Fund. European Dept.
Publication Date:
12 Feb 2016
eISBN:
9781498327961
ISBN:
9781498327961
Language:
English
Keywords:
ISCR; CR; estimate; potential GDP growth estimate; financial market authority; authority; consultation discussion; currency of Austria; social security fund; fund holdings of currency; percent quota; Reserve assets; consultation cycle
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Context: Austria weathered the global financial crisis well, with a short-lived recession and quickly recovering output and employment. It remains stable and affluent. However, the high public debt and the low potential growth need to be addressed through a decisive push for reforms. Outlook and risks: Growth is expected to pick up, helped by the 2016 tax reform, strengthening sentiment, and buoyant exports. Inflation and unemployment, although rising, are set to stay low. Potential growth slowdown in trading partners in the euro area and emerging markets poses the main downward risks.Fiscal policies: The general government deficit has been well contained in recent years. However, budget support for bank restructuring and resolution has pushed public debt above 86 percent of GDP. Moreover, the labor tax wedge remains high even after the personal income tax cut in 2016. Broad reform-based expenditure cuts in areas with obvious inefficiencies, such as health care, education, and subsidies, as well as further pension reforms, would allow rapid debt reduction and additional cuts in labor taxation.

Abstract

Context: Austria weathered the global financial crisis well, with a short-lived recession and quickly recovering output and employment. It remains stable and affluent. However, the high public debt and the low potential growth need to be addressed through a decisive push for reforms. Outlook and risks: Growth is expected to pick up, helped by the 2016 tax reform, strengthening sentiment, and buoyant exports. Inflation and unemployment, although rising, are set to stay low. Potential growth slowdown in trading partners in the euro area and emerging markets poses the main downward risks.Fiscal policies: The general government deficit has been well contained in recent years. However, budget support for bank restructuring and resolution has pushed public debt above 86 percent of GDP. Moreover, the labor tax wedge remains high even after the personal income tax cut in 2016. Broad reform-based expenditure cuts in areas with obvious inefficiencies, such as health care, education, and subsidies, as well as further pension reforms, would allow rapid debt reduction and additional cuts in labor taxation.

Fund Relations

(As of November 30, 2015)

Mission: Consultation discussions were held in Vienna from December 3-14, 2015. The authorities released the mission’s concluding statement, which is available at: http://www.imf.org/external/np/ms/2015/121415.htm

Staff team: Mr. Gueorguiev (head), Ms. Batini, and Messrs. Steinlein and Stepanyan (all EUR). Mr. Just (OED) participated in the discussions.

Country interlocutors: Minister of Finance Schelling, OeNB Governor Nowotny, Labor and Social Affairs Minister Hundstorfer, Minister of Arts, Culture, Constitution, and Media Ostermayer, other senior officials, parliamentarians, and representatives of the social partners, the banking sector, and think tanks.

Fund relations: Austria is on a 12-month consultation cycle. The last consultations were held June 20-July 1, 2014, and the staff report is available at: http://www.imf.org/external/pubs/cat/longres.aspx?sk=41904.0

Membership Status: Joined: August 27, 1948; Article VIII, as of August 1, 1962

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans: None

Latest Financial Arrangements: None

Projected Payments to Fund:

(SDR Million; based on existing use of resources and present holdings of SDRs):

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Implementation of HIPC Initiative: Not Applicable

Exchange System:

As of January 1, 1999, the currency of Austria is the euro, which floats freely and independently against other currencies. Austria’s exchange system is free of restrictions on the making of payments and transfers for current international transactions, with the exception of restrictions notified to the Fund in accordance with decision No.144-(52/51) resulting from UN Security Council Resolutions and EU Council Regulations.

Statistical Issues

1. Macroeconomic statistics are adequate for surveillance. Austria subscribed to the Fund’s Special Data Dissemination Standard (SDDS) in 1996, and its metadata are available on the Fund’s electronic Dissemination Standards Bulletin Board. Austria is availing itself of the SDDS flexibility option on the timeliness of the industrial production index and the merchandise trade data. Austria is currently preparing for SDDS Plus adherence.

2. The ECB reporting framework is used for monetary statistics and data are reported to the IMF through a “gateway” arrangement with the ECB. The arrangement provides an efficient transmission of monetary statistics to the IMF and for publication in the IFS and IFS Supplement.

Austria: Table of Common Indicators

(as of December 31, 2015)

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Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra-budgetary funds, and social security funds) and state and local governments).

Including currency and maturity composition.

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Cover IMF Staff Country Reports
Austria: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Austria
Author: International Monetary Fund. European Dept.
Volume/Issue:
Volume 2016: Issue 050
Publisher:
International Monetary Fund
ISBN:
9781498327961
ISSN:
1934-7685
Pages:
58
DOI:
https://doi.org/10.5089/9781498327961.002