Austria: No one knows how far deficit will widen

VIENNA: Austria, which has abandoned a pledge to balance the budget in the face of the coronavirus crisis, issued a draft yesterday that includes a small deficit and said it cannot predict how much further the shortfall will widen. The conservative-led government that took office in January with the help of the left-wing Greens had promised to balance the books but conceded on Saturday that this would not be possible. Its draft budget, including a deficit of 1 percent of gross domestic product, pledged 4 billion euros ($4.4 billion) to help deal with the economic fallout of the crisis, and the government said more aid is likely to follow soon. “How big the deficit will ultimately be cannot currently be foreseen,” the Finance Ministry said in a statement accompanying the draft, due to be approved by cabinet and submitted to parliament later yesterday.

Finance Minister Gernot Bluemel will give a shorter-than-usual speech to parliament on the budget on Friday. The draft is based on a GDP growth forecast of 0.8 percent provided by the Wifo economic institute that compiles GDP data, a Finance Ministry official said. The forecast, a downward revision of Wifo’s previous prediction of 1.2 percent, was provided to the government on March 11 and is likely to be overtaken by events soon if it is not already out of date, he added. “The only thing that is currently certain is that we are doing what is necessary and we are helping where we can,” Bluemel said in the Finance Ministry statement.