* S&P cites stable governance, pro-growth policy
* Expects government to focus on fiscal consolidation
(Adds government comment, background)
SYDNEY/VIENNA, March 28 Standard & Poor's on
Friday affirmed its AA plus/A-1 plus long- and short-term
foreign and local currency sovereign credit ratings on Austria,
saying the outlook was stable.
The affirmation reflects Austria's stable governance and
predictable economic policies supporting growth, the agency
"The stable outlook factors in our expectations that
Austria's economy will benefit from the improving international
economic environment, the new government will adhere to a strict
consolidation path, and Austrian banks will focus on their
moderate capital levels," S&P said.
In Vienna, the government welcomed the decision as
confirmation of its policies.
"S&P expressly hailed the government's progress on
consolidating the budget. Important interim goals on the way
towards a structurally balanced budget for 2016 have already
been achieved," Finance Minister Michael Spindelegger said.
Ratings agency Moody's last month revised its outlook on
Austria's AAA-rated government bonds to "stable" from
"negative", citing declining risks that the country will need to
keep helping other euro zone countries.
Moody's also cited stabilisation of the country's economy
and reduced risks from resolving issues related to distressed
nationalised bank Hypo Alpe Adria Bank.
The government aims to wind the lender down via a "bad bank"
that will boost state debt and deficits this year.
S&P highlighted the short-term impact of this in its
statement on Friday:
"Owing to the creation of a bank wind-down unit and the
reclassification of the general government sector this year, net
general government debt could jump to some 80 percent of GDP in
2014, compared with our previous expectation of 70.5 percent
that excluded these two one-off items, and then fall
thereafter," the agency said.
Fitch Ratings affirmed Austria's credit ratings at AAA with
a stable outlook last month, saying the government's favourable
budgetary position meant it could handle the cost of
restructuring Hypo Alpe Adria.
(Reporting by Wayne Cole and Michael Shields; Editing by Toby