Windfall for the cabinet: no deficit of billions after all

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Windfall for the cabinet: no deficit of billions after all

Instead of a budget deficit of six billion euros, the Dutch government has booked a small surplus in 2022. One hundred million euros remained in the budget, according to figures from the Central Bureau of Statistics (CBS). A year earlier, there was a deficit of more than twenty billion euros at the bottom of the line.

A few weeks ago, the Central Economic Planning Bureau had expressed the expectation that the government would face a budget deficit of six billion euros. But because government revenues have increased by 39 billion euros, the government can now count on a windfall. In addition, expenditures were also less than expected, explains BNR’s house economist Han de Jong. ‘That is because support for companies has been lower, because we had far fewer lockdowns than in 2021, for example. In addition, the government is also having difficulty spending money.’

Personnel shortages

This is mainly due to the tightness of the labor market. ‘Sometimes it is not possible to spend everything that has been budgeted, because there are staff shortages. That probably saved a few billion.’ Skimming off the excess profits of the fossil industry also resulted in a plus of six billion on the national budget: ‘As a result, government finances turned out better than expected.’

“It may be a dumb coincidence or foresight”

Han de Jong, BNR’s house economist

Despite the minor windfall, government debt has risen by more than 31 billion euros. But in percentage terms, there is actually a decrease of 1.5 percent compared to gross domestic product (GDP). The Netherlands is also doing well in relation to the EU budgetary rules. For example, there was no budget deficit in 2022 and the debt ratio, at 51 percent, is still well below the 60 percent limit set by the EU.

Smart move?

De Jong thinks that an estimation error by the Ministry of Finance is the basis for the absolute increase. The ministry ‘must estimate how big the deficit will be and start borrowing money on that basis. As a result, more was borrowed than was necessary last year.’ But that is not necessarily a bad thing, says De Jong. With current knowledge, it would have been a smart move, says the economist. “At the time, interest rates were lower than they are now, so that may be a dumb coincidence or foresight.”

Sigrid Kaag, Minister of Finance and responsible for public finances. (ANP / ANP)

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