Drastic increase government debt

31/03/2009 15:00

Government debt nearly 60 percent of GDP
Higher debt due to worldwide recession
Dramatical increase deficit municipalities

According to a provisional estimate conducted by Statistics Netherlands, the overall government debt has risen dramatically in 2008 by 87.4 billion euro. By the end of last year, goverment debt amounted to 346.2 billion euro, i.e. 58.2 percent of the gross domestic product (GDP).
The sharp increase of the gross government debt is caused by the global economic crisis. In the fourth quarter of 2008, the government has taken action to stimulate the financial sector.

The takeover of Fortis Nederland and ABN AMRO, the capital boost for ING, SNS Reaal and Aegon cost the government approximately 37 billion euro. Central government also lent nearly 44 billion euro to Fortis Nederland. Without these interventions, government debt would have risen by approximately 6 billion euro. The per capita debt rose by 5 thousand euro and currently stands at just over 21 thousand euro.

The budget deficit over 2008 was 6.1 billion euro. Government revenues grew by more than 17 billion euro in 2008 relative to 2007. Revenues from taxes and social contributions grew by nearly 5 percent and accounted for nearly two thirds. Natural gas revenues increased by over 4 billion (more than 50 percent).

Government spending grew by more than 13 billion euro in 2008. Salaries of civil servants and social benefits contributed to the increase in government spending.

On the local government level, the situation deteriorated. With 3.1 billion euro, the deficit reached a record high. In 2007, revenue and expenditure were more or less equal. On the municipal level, the deficit more than doubled to 3.5 billion euro due to higher costs. Investments rose considerably. The situation also deteriorated for other sectors of local government. Water boards faced a 0.4 billion euro deficit, while the provincial surplus shrank by 0.2 billion euro.

Last year, the central government surplus was 4.2 billion euro. Social funds achieved a surplus of 4.9 billion euro.