Austria Delays EU Budget Compliance Amid Economic Challenges

Austria's budget deficit is projected to shrink marginally to 4.5% of GDP this year, down from 4.7% in the previous year, according to the new coalition government's budget unveiled on Tuesday. The conservative-led administration, which came into power in March, plans to achieve the European Union's 3% deficit limit by 2028—a timeline extended due to ongoing economic challenges.

Finance Minister Markus Marterbauer, from the Social Democrats, emphasized the necessity of restoring public finances, a challenging task given the current economic conditions. Marterbauer criticized the former government for its ineffective fiscal policy, which resulted in inadequate funding to support targeted climate-change initiatives, stressing the financial strain left behind by the previous administrations.

The budget outlines major fiscal adjustments, including raising annual taxes by 550 million euros on banks and energy companies, and saving two billion euros by eliminating a 'climate bonus' for taxpayers. Despite these measures, Austria's debt-to-GDP ratio is expected to climb, peaking at 87.0% in 2028 as per the Finance Ministry's estimate.

(With inputs from agencies.)