* Government backs constitutional debt brake
* Spreads over Bunds have widened
* Balancing debt cuts with economic growth an issue
* Some market speculation over risks to triple-A rating
(Adds comments from debt office head)
By Michael Shields
VIENNA, Nov 15 Austria will try to balance
its budget faster than first planned and use a constitutional
debt brake to get a firmer grip on public finances and protect
its triple-A rating, officials said on Tuesday.
The steps come amid mounting market pressure on euro zone
members to reduce debt and some market talk that Austria -- one
of only six top-rated sovereigns using the euro currency --
could drop out of the club.
"We will set spending caps that will lead us to a balanced
budget faster than originally planned, and we want to bring the
debt down to 60 percent of gross domestic product by 2020,"
Finance Minister Maria Fekter said in a radio interview.
The head of one of Austria's main research institutes raised
the possibility last week that the country's triple-A rating
could be at risk if the euro zone crisis continued to deepen.
That has prompted a round of market speculation on a downgrade.
The governing coalition has agreed to adopt a debt brake in
the constitution that will automatically cap the euro zone
country's national debt.
Euro zone leaders last month embraced such an approach as a
way to overcome the region's sovereign debt crisis.
Fekter said the plan was to limit federal budget deficits in
future to no more than 0.35 percent of gross domestic product
(GDP). Austrian provinces and municipalities would have to
present balanced budgets by 2017.
The government has projected national debt, which will hit
an estimated 73.6 percent of GDP this year, to peak at 75.5
percent of GDP in 2013. Its 2012 budget due for final approval
in parliament on Friday envisages a deficit of 3.2 percent of
GDP, dipping from an estimated 3.9 percent in 2011.
Spreads on 10-year Austrian government debt over benchmark
German Bunds have widened to euro-era highs on talk Austria
could lose its triple-A status, but government officials have
said they had no indication of this from ratings agencies.
Martha Oberndorfer, head of the country's debt management
office, insisted Austria had solid fundamental data to back up
its premium rating.
"Austria's ability to support debt is one of the highest in
the world," she told Reuters, noting all three major ratings
agencies have Austria on AAA with a stable outlook.
"Our debt level is significantly below the euro zone
average, the budget deficit is heading back toward the
Maastricht criteria ... In my view Austria is miles ahead of
other countries. For me the bottom line is: Never forget how
many people make money from such rumours (of a downgrade)."
In the radio interview, Fekter called for tighter rules on
debt rating agencies.
She reiterated that Austria had to work on gradually
reducing its deficit and debt with an eye to ensuring that
radical steps do not wipe out economic growth.
"We want to generate more tax revenue via full employment
and growth. Only via good growth will we reach our goal. You
have to proceed cautiously given the economic slowdown that is
emerging," she said.
Key areas for savings included the country's high rate of
early retirement, administrative costs and health care, she
said. Tax reform had to reduce the burden on earned income and
raise it on things that harm the environment.
Fekter, a fiscal hawk from the conservative People's Party,
has been resisting calls from her Social Democrat coalition
partners to adopt a wealth tax, arguing that Austria already
takes a relatively tough approach on taxing the well-to-do.
(Additional reporting by Sylvia Westall; Editing by Patrick
Graham and Susan Fenton)