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2007 OECD Economic Surveys: Austria 2007

image of OECD Economic Surveys: Austria 2007

This 2007 edition of OECD's periodic survey of Austria reviews recent developments in its economy and examines current challenges including Austria's deepening economic integration with Central and Eastern Europe, overcoming labour market segmentation, improving innovation, and rationalising fiscal policy and strengthening public expenditure management.

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Rationalizing fiscal policy and strengthening public expenditure management

On unchanged policies, and taking into account population ageing, Austria’s debt is projected to rise as a share of GDP in the period to 2050, according to OECD projections. Although this increase is less sharp than in most other OECD countries, it implies a need for additional measures aiming at fiscal consolidation. The government has made commendable efforts to contain pension costs and to improve cost-efficiency in public administration, has taken an important first step on health care reform, and aims at achieving a balanced budget over the economic cycle. This requires further fiscal consolidation efforts. The structure of taxation should also be improved to further promote growth and employment and to distribute the fruits of economic growth more equitably. The quality and cost-efficiency of public spending can be strengthened through budgetary reforms (including adoption of a mediumterm budgetary framework and of output-based budgeting). Reforming fiscal federal relations, in a manner that gives more responsibility and accountability to all public sector spending agencies and better harmonizes financing and spending responsibilities across all levels of government, can also promote better governance and sound public administration.

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