Federal Ministry of Finance: Moody's confirms Austria’s triple A Rating
Outlook does not take adequate account of current consolidation package
Press Release, 14 February 2012
Vienna (BMF) – The Federal Ministry of Finance welcomes Moody’s decision to keep the credit rating of the Republic of Austria at triple-A status. In terms of its reasons for keeping Austria’s credit rating at top status, Mood y’s cited inter alia Austria’s strong, diversified economy, its lack of macroeconomic imbalances, its low levels of unemployment and the fact that the country has had a current account surplus since 2002 – as well as the fact that the 2011 budget deficit has turned out better than expected as a result of greater tax revenues and stricter spending discipline.
However, the BMF regrets that Moody’s has changed Austria’s outlook from “stable” to “negative”. External factors, such as the international debt crisis, played a major role in the decision to adjust the outlook downward, as did the exposure of the Austrian banking sector in Eastern Europe. This change of status takes insufficient account of the austerity package which has just been adopted. Moody’s assumption is that the debt ratio will increase, whereas the new deficit package provides for significantly lower rates of debt beginning in 2012. Moody's stated that the negative outlook could result in a downgrade if either the Eurozone crisis increases drastically or the need arises to provide further significant aid to the banking sector.
At present there are no indications that such aid will be necessary. The Austrian financial sector is currently implementing various measures to strengthen its capital base. It is our assumption that Moody’s will take account of the measures implemented in its future ratings. Moody's itself says that significant improvement to the capital base of the Austrian financial sector will lead to Austria’s outlook being returned to “stable”.