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Austrian finance minister sees 1.5 percent 2014 budget deficit - paper

VIENNA (Reuters) - Austria is targeting a structural budget deficit of 1.5 percent of economic output next year as it works toward a balanced budget in 2016, new Finance Minister Michael Spindelegger told a Sunday newspaper.

The centrist coalition sworn in for another five-year term in the euro zone member last week is still working on the 2014 budget plan that is due to go to parliament early in the year.

"We are missing about 2 billion euros ($2.73 billion) because of the weak economy. That means we won't be able to keep the new borrowing requirement to 1.3 percent. We will stay on track with 1.5 percent," Spindelegger was quoted as saying in an interview published by Oesterreich.

Austria's 2013 budget envisioned a nominal 2.3 percent deficit, but officials have said final results will be better thanks to higher-than-expected tax revenue and one-off income from a mobile frequency auction. It had aimed for a 1.2 percent structural deficit that excludes one-off items.

Spindelegger, leader of the conservative People's Party, switched to finance from the foreign ministry in the new cabinet led by Social Democrat Chancellor Werner Faymann.

One of his biggest challenges will be coming up with a plan for handling nationalised lender Hypo Alpe Adria (HAABI.UL), whose chronic need for state aid is complicating efforts to reduce debt and deficits.

The country's political leaders, central bank and Hypo itself have ruled out letting the lender go bust, which would trigger around 14 billion in debt guarantees from home province Carinthia that the province cannot afford.

Under a restructuring plan agreed with the European Commission, Austria can give Hypo 5.4 billion euros in capital from 2013 to 2017. Up to 3.65 billion of that remains available.

Spindelegger gave few clues into the latest thinking on Hypo, telling the Kurier paper: "At stake here is the best solution for all involved. Too much cannot be demanded of either taxpayers or the banking sector."

The coalition partners have earmarked 5.8 billion euros in aid to struggling banks over the next five years. ($1 = 0.7315 euros)

(Reporting by Michael Shields; Editing by Mike Collett-White)