Austrian town claws back from bankruptcy with bold financial reforms
The small Austrian town of Matrei, home to just 4,600 people, has clawed its way back from the brink of bankruptcy. Three years ago, it was drowning in €36 million of debt, with unapproved loans and reckless spending pushing it to insolvency by 2022. Now, under new leadership, the municipality has slashed its debt by nearly a third and restored its credit score.
Matrei's financial troubles began long before its near-collapse. A Court of Audit report revealed that the town had been overspending since 2003, fuelled by costly projects like the Tauern Stadium and an unfinished outdoor swimming pool. By 2022, despite earning 8% more than similar Tyrolean towns, it was effectively insolvent. The former mayor stands accused of taking out unauthorised overdraft loans and approving a land swap deal without council permission—decisions that cost taxpayers €525,500.
Facing a €1.3 million creditor demand in early 2023, Matrei had no choice but to impose strict austerity measures. The current mayor, Raimund Steiner, took office in 2022 and immediately began selling off non-essential properties, cutting administrative costs by 15%, and freezing unnecessary spending. These steps, combined with state grants for infrastructure, helped reduce debt from €15 million to a projected €10.5 million by 2025.
The turnaround earned Matrei a credit rating upgrade from B to A- in late 2024, easing fears about Austria's wider municipal creditworthiness. Steiner is now reviewing the audit report to determine whether his predecessor committed intentional negligence. Despite the past mismanagement, he insists the town's future is brighter, declaring that 'things are looking up'.
Matrei's recovery has been swift but hard-won. By selling assets, trimming costs, and securing external funding, the town has cut its debt by 30% in just three years. With its credit score restored and stricter financial controls in place, officials now face the task of ensuring stability—and preventing a repeat of past mistakes.
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