Fitch approves Austria’s financial trustworthiness

One of the world’s leading credit rating agencies has confirmed the Austrian AAA.

US American agency Fitch announced yesterday (Tues) it decided to reaffirm the alpine country’s top credit rating. Fitch also gave a stable outlook on Austria’s economic development.

The Austrian economy strongly depends on tourism, its retail trade – which employs more than half a million people – and the 40,000 Austrian enterprises which engage in export. The value of Austrian products and services sold abroad in 2011 was worth 122.5 billion Euros – a new annual record.

The domestic tourism sector achieves nearly 20 per cent of the gross domestic product (GDP). Austria’s hotels feature 1.1 million beds. Around 28 million overnight stays were registered between November 2011 and January 2012, up by 0.6 per cent compared to the 2010/2011 winter holiday period.

Fitch’s estimation comes shortly after Standard & Poor’s (S&P) decided to downgrade Austria, which joined the European Union (EU) in 1995, by one notch to AA+. Moody’s – which dominates the credit rating business alongside Fitch and S&P – confirmed Austria’s AAA but issued a negative outlook, meaning that the agency is at the ready to downgrade the state’s solvency.

Austrian People’s Party (ÖVP) Finance Minister Maria Fekter claimed Fitch’s decision had to do with the government’s latest budget consolidation package. The finance minister said the rating agency might not have confirmed Austria’s triple-A had her party and the Social Democrats (SPÖ) not decided to create a 26.5-billion-Euro austerity package.

SPÖ Chancellor Werner Faymann said Fitch’s move proved that international investors put great trust in Austria. ÖVP Vice Chancellor Michael Spindelegger announced that the country was on track. He praised Austria’s export activities as “excellent” and described the state’s administration as “efficient”.

Especially the latter claim could upset the opposition and independent researchers. The Audit Office (RH) and other organisations have appealed on the SPÖ-ÖVP coalition many times to lower its spending on bureaucracy and administration more significantly. Higher flexibility is needed as well in this regard, according to experts.

A contradictory estimation was recently issued by Viviane Reding, the European commissioner for justice, fundamental rights and citizenship. Speaking to Austrian radio station Ö1, Reding said that the country was “highly respected” for its efficient tax system and public administration.

Reding underlined how grateful she was that Fekter and ÖVP Justice Minister Beatrix Karl agreed to sending experts on administration and bureaucracy to Greece to help the economically challenged country creating functioning taxation mechanisms.

The Federation of Austrian Industries (IV) – which is headed by Veit Sorger – warned the government coalition yesterday from trying to stop the spiralling health and pension sector costs because of Fitch’s AAA confirmation.