Experts are not worried for the time being. But: Only growth helps to overcome the mountain of debt – otherwise there is a risk of collapse
“The budgetary answer to the Covid crisis is expensive, but we can afford it,” said Finance Minister Gernot Blümel about the exploding debt in the face of the pandemic. But is Blumel's statement true? Can we afford it? And: who should pay for all of this? More and more people, employees and entrepreneurs alike, are asking this question.
After several improvements, the budget for 2021 was decided on Thursday. At 7.1 percent, the deficit remains at the second highest level ever. And the mountain of debt is growing towards 350 billion euros – an absolute record.
Lockdown Billions
The federal government is pumping 50 billion euros into crisis management this year and 2021. The hard lockdown costs one to one and a half billion euros every week.
From a financial perspective, it is almost inconceivable that a third or fourth lockdown could be managed. The hope for a vaccine against Covid-19 soon is also fed by the fear of a third wave in the new year.
Economists such as IHS boss Martin Kocher (see interview on the right) rely on a mix of measures to get out of the crisis and off the mountain of debt: Promote new economic growth, for example in environmental technologies, and save at the same time, for example where the spending dynamics in recent years was particularly high (pensions, long-term care, health).
This brings with it distribution conflicts. The dispute over the abolition of the hacking regulation provides a first foretaste. Will it soon be saying: young versus old, rich versus poor, pensioners versus employed?
But the wealthy tax?
A change of direction can also mean what Wifo has long been calling for: Relieve work, burden energy and environmental consumption higher. And wealth taxation worthy of the name – politically highly controversial.
On a completely different level, people have fears about the future, e.g. B. the fear of a future hyperinflation as in the interwar period, that is, inflation, loss of jobs and assets. They are debating on the internet about bankruptcies and system failures.
Even the insolvency of the European Central Bank haunts the forums as a horror scenario. The central bank cannot go bankrupt, ECB boss Christine Lagarde recently had to make it clear to the public.
The concern arises from the fact that the ECB has long been the largest creditor in the monetary union with its program to buy up government bonds with a poorer credit rating for 3,000 billion euros. If the ECB flops, everything goes down the drain, is a short formula among economic apocalyptics.
Meanwhile, the reality in the financial market is very different. Crisis, which crisis? Countries like Austria and Germany borrow at historically low interest rates thanks to their excellent credit ratings. In some cases, banks and funds even pay for being allowed to buy bonds from Austria just so that their money is safely invested (“negative interest”).
Debt management
The Federal Finance Agency (OeBFA) is responsible for the republic's debt management. But who are Austria's creditors? Who is lending us all the billions for the corona debt? At OeBFA, too, this is not exactly known, because bonds can change hands at any time during their term on the so-called secondary market.
The ECB is also not allowed to buy the government bonds on the primary market. This is to ensure that states get into debt at market conditions and that the ECB does not take over the financing of completely ailing countries.
What we do know is that more and more central banks, insurance companies and pension funds are buying Austrian government bonds. The share of fund companies is falling, banks came first this year. And: around 90 percent of investors come from Europe, four fifths of them from the euro zone.
They all want to see their money again at some point. This is possible – without a complete system change – only with new growth, falling unemployment and more tax revenue for the state.
