VIENNA, July 9 Austria's budget deficit will not
exceed the European Union's ceiling of 3 percent of gross
domestic product this year despite the costs of creating a "bad
bank" for nationalised lender Hypo Alpe Adria, the
country's fiscal watchdog said.
"Even considering the restructuring costs for Hypo Alpe
Adria ... the upper (deficit) limit will not exceed 3 percent,"
Bernhard Felderer, head of the Fiscal Council board, told a news
conference at the release of its annual report on Wednesday.
"You know we estimate (a deficit of) 2.7 percent for this
year. We think a bit more will come but not to the extent that
we will exceed 3 percent," he added.
The Hypo bad bank to wind down around 18 billion euros in
assets will push up the deficit and boost state debt to nearly
80 percent of GDP this year.
One-off items including windfall revenue from a mobile
telecoms frequency auction helped reduce Austria's state deficit
to 1.5 percent of GDP in 2013.
The Fiscal Council estimated that Austria's structural
deficit - which strips out one-off items - was 1.3 percent of
GDP last year, above the government's 1.1 percent estimate.
The structural gap is likely to hit the medium-term target
of 0.45 percent only in 2016, said Felderer, adding that Austria
needed additional measures promised by the government in April
to avoid significant deviations from the target path.
Finance Minister Michael Spindelegger has been seeking
additional savings from ministries after Austria's main economic
research institutes last month trimmed their 2014 growth
forecasts to 1.4-1.5 percent from 1.7 percent.
(Reporting by Michael Shields; Editing by Gareth Jones)