Government deficit 5.4 percent in 2010

31/03/2011 15:00

Public debt runs up to 62.7 percent of GDP
Tax and premium yields lower than in in 2008
Social funds in the red
Huge deficit provinces
Bank debt repayments curb growth public debt

According to the first estimates released by Statistics Netherlands, last year’s government deficit stood at 5.4 percent of the gross domestic product (GDP), just under the 2009 level. The debt of the Dutch government increased further from 60.8 to 62.7 percent of the GDP. Public debt and public deficit are still above the European standards.

The government deficit was 32 billion euro. Government spending exceeded government receipts by 25.2 billion euro. The deficit at local government level was 4.7 billion euro. For the first time in years, provinces reported a deficit (nearly 1 billion euro). The province of Zeeland partly accounts for this deficit due payment of an amount to be released from obligations and lower dividend yields after the sale of Dutch energy companies Nuon and Essent in 2009.

Social funds reported a deficit of 2.1 billion euro in 2010, a substantial reduction relative to 2009. The government has taken over outstanding debts of health insurance funds. For many years, contributions to social funds have been insufficient to cover social benefits.

Expenses and receipts of social funds both grew by more than 9 billion euro in 2010. Higer expenses were mainly due to an increase in expenditure on health care and social security. Revenues from tax and social contributions were more than 4 percent up on 2009, though still several billions below the 2008 level.

There were two large one-off expenses in 2010, i.e. the government took over the debt of the former Netherlands Antilles (0.8 billion euro) and ABN Amro received a new government bail-out (0.9 billion euro).

Public debt increased by more than 23 billion euro to 371 billion euro in 2010. This is partly due to the financing of the government deficit of 32 billion euro. Financial support to other European countries also contributed to the higher public debt. Greece received a loan to the amount of 1.2 billion euro. The Dutch government also bought bonds worth 0.8 billion euro from Curaçao and St Maarten.

Part of the government support given to various financial institutions was paid back. ABN Amro paid back more than 3 billion euro. Aegon bought back shares to the amount of 0.5 billion euro. Developments in the American mortgage portfolio, which the government took over in 2009 reduced public debt by over 2 billion euro.