Dutch public debt below EMU target

© Hollandse Hoogte
At the end of Q1 2017, the Netherlands’ government debt stood at 59.6 percent of GDP. It is the first time in six years that public debt falls below 60 percent of GDP. Public debt was lower due to a budget surplus and returns from reducing financial assets. The gross debt ratio also fell due to GDP growth, according to figures released by Statistics Netherlands (CBS).
The target set by the European Union stipulates that, calculated over the entire calendar year, government debt should be either below or moving down towards 60 percent of GDP. At the end of 2016, the debt ratio still stood at 61.8 percent. In Q1 2017 it improved by 2.2 percentage points, of which 0.5 percentage point was due to GDP growth. The reduction in domestic debt was equivalent to slightly under 12 billion euros. As a result, public debt stood at nearly 423 billion euros or nearly 25 thousand euros per capita at the end of March. In the June 2017 forecast by the CPB Netherlands Bureau for Economic Policy Analysis, public debt is calculated as 58.5 percent of GDP towards the end of 2017.

Lower debt as revenue exceeds expenditure

In Q1 2017 the government was able to cut back public debt because public revenue exceeded public expenditure by more than 5 billion euros. The government was responsible for the largest share in the budget surplus with nearly 4 million euros in revenue. Revenues from both corporate and income taxes increased by around 2.5 billion euros year-on-year, while public expenditure stayed at similar levels.

Sale of financial assets

Aside from a budget surplus, the sale of public financial assets worth over 6 billion euros further reduced national government debt. Shares in ASR were sold at a value of 0.5 billion euros. Ending interest and currency derivatives yielded over 1 billion euros for central government. In Q1 2017 the government earned over 3 billion euros in taxes which were levied in 2016. In addition, over 3 billion euros in receivables were settled by the European Union. This was the result of an agreement on lower remittances to the EU. Such transactions in financial assets do not affect the budget surplus but do provide revenues which can be used to repay outstanding debts.

Sources