Carinthia given €343 million lifeline

Carinthia given €343 million lifeline
Finance Minister Hans Jörg Schelling. Photo: Franz Johann Morgenbesser/Wikimedia
Austria’s Finance Minister Hans Jörg Schelling has approved an agreement with Carinthia over a €343 million ($385 million) loan which the province needs to avoid an immediate insolvency, after weeks of tough negotiations.

Schelling said he wouldn't give any details about the loan until it had been approved by the Carinthian government, but added that Carinthia urgently needed structural and budget reforms. The loan will be provided by the Austrian Treasury at “relatively good” conditions, he said.

“This is about securing Carinthia’s operations and public institutions like kindergartens, schools and hospitals,” Schelling said. “This isn’t about Carinthia’s debt.”

Carinthian governor Peter Kaiser (SPÖ) said on Tuesday that the province is willing to make drastic spending cuts. It was feared that the state would run out of money within weeks if no deal was reached.

Carinthia's finances have been hit hard by the Hypo Bank disaster. The Austrian province lost market access when Moody’s Investors Service cut its credit rating in March.

The move followed Austria’s decision to wind down and impose a debt moratorium on former state-owned lender Heta Asset Resolution AG, which has €10.2 billion of its liabilities guaranteed by Carinthia.

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