Public revenue and public expenditure nearly balanced in 2022

The general government balance and government debt are the main indicators for the current public finance conditions. The European convergence criteria allow a maximum deficit of 3 percent of GDP and a maximum debt level of 60 percent of GDP. Due to the exceptional circumstances, the European Commission temporarily suspended the European budget rules. Despite the aftermath of the coronavirus crisis and the outbreak of the energy crisis, which led to extra expenditure in 2022, both the revenue and expenditure balance and public debt fell further below the European convergence criteria.

Public revenue increased by 10 percent

Last year, government revenue rose by 10 percent relative to 2021. This sharp increase is fully in line with the 10 percent rise in GDP. Government revenue tends to fluctuate in alignment with GDP. Over the past two decades, the revenue ratio (revenue expressed as a percentage of GDP) has been slightly over 40 percent of GDP, with a small increase in recent years.

Of this increase of 39 billion euros, 28 billion came from taxes and social security contributions. The one-off solidarity contribution levied on excess profits of fossil fuel companies contributed more than 6 billion to this amount. The 11 billion-euro increase in other revenue was mainly due to higher natural gas revenues through the state-owned company Energie Beheer Nederland (EBN).

Revenue from taxes and social contributions as a percentage of GDP fell slightly last year. This was mainly the result of lower energy taxation. The fiscal burden (the sum of taxes and social contributions as a percentage of GDP) declined by 0.6 percentage point to 38.9 percent. By contrast, the burden had increased in prior years from 36.5 percent in 2015 to 39.5 percent in 2021.

Less coronavirus-related expenditure, but more spent in 2022

In 2022, government expenditure rose by 19 billion euros or 5 percent year on year. Less was spent on coronavirus-related measures on the one hand, compared to the previous year; This is most evident in subsidies, which decreased by nearly 14 billion euros. On the other hand, public expenditure increased for various reasons, leading to higher spending on items such as healthcare and compensation of government employees. Some government measures to help families, businesses and institutions through the energy crisis weighed heavily on the government budget. Lump-sum transfers to households grew by over 3 billion euros due to the 190 euros in compensation for energy bills in November and December 2022. The energy allowance paid to low-income households cost nearly 2 billion euros. Worth mentioning are the 6 billion euros more in taxes that were paid over 2022. This was related to the taxes that state-owned enterprise EBN, seen as part of the government sector in CBS statistics, has to pay to the State on its profits.

Debt down to 51 percent of GDP

Public debt increased by €31 billion in 2022 despite the fact that revenues and expenditures were almost balanced over 2022. This is partly explained by the fact that some of the incoming payments were deposited in bank accounts and deposits, with the balance over 12 billion euros higher year on year at the end of 2022. Government debt as a percentage of GDP, also referred to as the gross debt ratio, came out at 51.0 percent at the end of 2022. This is 1.5 percentage points lower than at the end of 2021, when the debt ratio stood at 52.5 percent. This decline was due to the much faster growth of GDP compared to the debt in euros.