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Vienna , 03 May 2012 Fekter: “The stability pact we now have in place charts a new course for Austrian public finance” “Sustainable agreement on stable public finance secured with the Austrian Länder – working together to make Austria fit for the future”

“Following intense and constructive negotiations, the Austrian federal government has succeeded in reaching an agreement with the Austrian L änder and municipalities that will benefit us all. We have now established austerity requirements that are binding on the Austrian federal government, Länder and municipalities”, Austrian Finance Minister Dr. Maria Fekter stated, summarising the outcome of negotiations. The stability pact has created a fixed upper limit on expenditures, in line with the debt brake. Growth in spending is required to remain below GDP growth, and now for the first time debt reduction is being enshrined as a rule applicable to domestic inter-governmental relations within Austria.

Fekter: “Our goal is clear: We intend to and shall achieve a zero deficit in 2016. This new stability pact evinces the intention of all parties to achieve savings and we are well on the way towards a balanced budget.”

In the event the deficit rules are breached, there are sanctions (modelled on the EU sanction format) which take hold by way of a multi-stage process. The plan is to ensure that corrective action will be taken immediately and when such action fails to take hold, then sanctions will be imposed. Where there is a risk of EU proceedings, then the process of internal Austrian sanctions will be more rapidly deployed. The Court of Auditors will issue a report as to any federal, Land or municipal governmental body with deficit overruns, giving them two months from the date of a warning notice to take action in order to avert sanctions.

“What is decisive for me is the fact that application of our new stability pact is not in any way term-limited”, Dr. Fekter emphasised. “The new stability pact is the implementation of our constitutional debt brake by way of an internal treaty”, Dr. Fekter went on to say.

Naturally, control limits as to liabilities, the Maastricht deficit and now also the structural deficit will continue to apply in future, as well.

In addition, by adopting this stability pact, Austria is implementing the relevant rules of the fiscal compact adopted by the European Council of the Heads of State and Government, which underscores the importance of the path on which Austria has embarked.

“Our implementation of the new stability pact also sends a clear signal to the financial markets. In this way we are showing that Austria is systematically pursuing consistent policies with respect to sustainable budgeting”, Finance Minister Dr. Fekter stated in closing.