Dutch Public Debt Exceeds EU Limit of 60 Percent
The Dutch Public Debt has exceeded the 60 Percent EU Limit for the first six months of this year. The last time this occurred was in 1999. The public debt totalled 365B Euros. This represents a 10% increase from the end of 2008. The Government-Debt-GDP was 61.1%.
Dutch Public Debt
Source: Statistics Netherlands
Why did the public debt grow so fast?
In January, the Dutch government took 80% of all the soured loans and profit of the American mortgage portfolio of the large ING bank. This caused the public debt to increase by about 20B Euros.
It is not just the US where tax revenues are down and government expenditures going up. The Netherlands also has the same problem as noted below.
From Statistics Netherlands:
“Public revenue more than 6 bn euro down
Public revenue over the first half of 2009 was more than 6 bn down on the first six months of last year. Revenue from social contributions, wage and income taxes was about the same as in the first half of 2008. Other tax revenues have fallen dramatically. Revenue from VAT shrank by 1 bn euro. Due to the poor situation on the housing market, revenue from property transfer tax declined by nearly 1 bn euro. Revenue from dividend tax was reduced by 1.5 bn euro. Corporate tax revenue was reduced by 2 bn.
Revenue from capital dropped considerably by more than 1 bn euro. Lower natural gas revenues were partly offset by extra government revenues from capital invested in the financial sector by the end of 2008.
Public expenditure nearly 6 bn euro up
Government expenditure was nearly 6 bn higher than in the first half of 2008. In particular benefits under the Exceptional Medical Expenses Act (AWBZ) and basic health care benefits rose substantially by nearly 3 bn euro. Wage payments, acquisitions, investments and subsidies increased by 1 bn each. The reduction on Dutch payments to the European Union had a positive effect on the government balance sheet, which was brought down by nearly 2 bn euro due to discounts stipulated on EU contributions.”
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