Federal Budget and Public Debt During the COVID-19 Crisis

Budget Analysis in View of the Federal Aid Measures
In a recent article of the WIFO-Monatsberichte (monthly reports) by Simon Loretz, Hans Pitlik and Margit Schratzenstaller examine fiscal measures against the COVID-19 crisis in light of the federal budget 2021 and Medium-term Financial Framework 2021 to 2024.

Uncertainties about macroeconomic and epidemiologic developments are shaping the budget process for 2021 to 2024. To mitigate the economic and social consequences of the COVID-19 crisis, the federal government implemented a number of measures, the cost of which contributed to a record deficit in 2020 and will continue to lead to a sharp increase in the general government debt ratio to up to 85 percent of GDP (2022). In the long term, the high debt burden should be reduced; however, the persistently low level of interest rates favors a reduced pace of fiscal consolidation and also allows partial reliance on "growing out" of debt.