VIENNA, July 1 Austria should rethink its plan to cancel 890 million euros ($1.21 billion) of subordinated debt issued by nationalised bank Hypo Alpe Adria that was guaranteed by the province of Carinthia, the International Monetary Fund said on Tuesday.
"While designed and intended as an isolated case, the prospective wipe-out risks calling into question similar guarantees issued by other sub-national bodies," the IMF said in a summary of its annual review of Austria's economy.
Austria has defended the plan as a way to ensure investors - and not just taxpayers - help pay to wind down the bank it had to nationalise in 2009.
The IMF added it saw Austrian economic growth accelerating to around 1-1/2 percent this year, down from its previous forecast of 1.7 percent given in April. The economy is estimated to have grown 0.3-0.4 percent in 2013. (Reporting by Michael Shields; Editing by Georgina Prodhan)