Fiscal Consolidation Shapes 1996 and 1997 Budgets

This year, the Austrian Parliament has for the first time approved draft budgets for two successive calendar years. Fiscal policy is aimed at trimming the Federal deficit to 2.7 percent of GDP by 1997. Apart from major public spending cuts, which account for about two-thirds of the deficit reduction, a wide-ranging package of tax measures was passed. These will raise an additional ATS 46 billion in revenue, of which ATS 11 billion will be transferred to the Federal states (Länder) and local authorities, in order to enable them to cut their deficits to 0.3 percent of GDP. If this target is also met, Austria will have fulfilled an important condition for participation in the European Monetary Union.