2023-08-25 22:20:41
The rating agency Fitch has raised the rating outlook for Austria from “negative” to “stable” – so there are no signs of a change in the rating in the near future. Austria’s creditworthiness for long-term foreign currency bonds is confirmed with the second best possible value “AA+”. The reason for the improved outlook is that the risks for the energy supply have decreased.
Austria is one of the few EU countries that still imports significant quantities of Russian pipeline gas, which accounted for almost 60 percent of monthly imports on average in the first half of the year. While these deliveries might be canceled if the transit contract between Ukraine and Gazprom is not extended beyond 2024, such a situation should be manageable as Austria has secured access to non-Russian gas, the reason for the improved outlook is said to be .
Fitch also points out that Austria’s gas storage facilities, including the government’s strategic reserves, are 92 percent full.
The largest public utility in Austria, OMV, has also taken important steps to diversify its gas resources in the medium and long term. OMV has booked additional pipeline capacity through 2026 and once more through 2028 for 45 percent and 22 percent of annual consumption, respectively. In July, OMV announced the discovery of a domestic gas deposit that might increase the low annual domestic production by 50 percent from 2024. It also signed a 10-year LNG deal with BP that will secure 16.5 percent of annual consumption from 2026. In the long term, major investments in Romania might bring additional gas supplies.
The long-term “take-or-pay” contract between OMV and Gazprom, which runs until 2040, is seen as an element of uncertainty. However, the Fitch experts now consider it less likely that domestic or international political pressure might lead to an early end of the contract.
Fitch expects Austria’s budget deficit to fall from 3.2 percent in 2022 to 3.0 percent this year and to 1.5 percent in 2024. Public debt is expected to fall to 76.6 percent of GDP by the end of 2023 and will continue to decline to 73.4 percent in 2025, according to the estimate.
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