Dutch deficit drops to 4.7 percent

Dutch deficit drops to 4.7 percent

According to figures released by Statistics Netherlands today, Dutch government deficit amounted to 4.7 percent of gross domestic product (GDP) in 2011. In 2010 the deficit was 5.1 percent of GDP. Government debt rose further to 65.2 percent of GDP. These figures mean that the Netherlands has now exceeded the European norms for deficit and debt for the third year in a row.

Government revenues rose by only very little, 0.8 percent, while spending was 0.2 percent higher than in 2010. As a result, the deficit fell slightly and came to 28 billion euro in 2011.

Municipal deficits accounted for a significant part of the decrease in government deficit. Substantial cuts in municipal spending, for example on hiring external services and fixed capital formation, decreased by 1 billion euro to just over 3 billion euro.

The shortfall for central government was 17 billion euro. Compared with 2010 0.9 billion euro extra was spent on care allowances, and dividend revenues from the Dutch Central bank were 1.4 billion euro down. Revenues from VAT were over 1million euro lower because of weaker consumption. Conveyance tax put 0.9billion euro less in central government coffers than in 2010. This was mainly the result of a reduction in the rate of conveyance tax introduced in June 2011. Central government compensated for lower revenues by spending less.

The social funds reported a 7 billion euro deficit. The funds for unemployment benefits and for exceptional medical expenses both showed large deficits. The health care insurance fund, on the other hand, had a slight surplus as a result of higher premiums.

Dutch government debt rose by nearly 23 billion euro in 2011. At the close of the year the debt amounted to 393 billion euro. The debt rose by less than the deficit of 28 billion euro in 2011, as the government received extra revenues from sales of participations not included in government surplus/government debt. Among other things, the state received more than 5 billion euro from repayment of support paid to ING and Aegon. On the other hand, loans of nearly 3billion euro to the ailing EU countries increased the debt slightly.

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