Austria must safeguard its top credit rating by bringing forward a “debt-brake” law to avoid being sucked into a debt “maelstrom” like other countries, Chancellor Werner Faymann told state broadcaster ORF today.
Under a draft law modeled on a German rule, Austria is set to put into its constitution a goal to cut its debt level to 60 percent of gross domestic product by 2020, Faymann and Vice Chancellor Michael Spindelegger said in a joint interview. The law is due to be sent to parliament after the government’s weekly meeting tomorrow, they said.
“We have to protect Austria against getting into a maelstrom as it happened to other countries. We have to defend our AAA rating,” Faymann said in the interview. Austria is one of the six remaining euro area countries still rated AAA by the major ratings companies.
Austria’s 10-year bonds have dropped for four days, partly on market talk that it may lose that rating, driving the yield to 3.423 percent today, the highest level in more than four months. The extra interest, or spread, it must pay investors to hold those bonds instead of German ones widened 15 basis points to 164 basis points today.
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