Government finances less rosy in Eurozone

15/07/2002 10:00

Dutch government debt as a percentage of GDP is shrinking rapidly. The situation of government finances in the Eurozone is considerably less positive, however. The slowdown in economic growth is making itself felt. The larger EU economies, in particular, are running into problems.

Dutch government budget surplus around zero

In the last three years the Dutch government has spent less than it has received. This year too, the government expected to have a sight surplus. But in June the bureau of economic policy analysis tightened its estimate for the budget surplus, and now foresees a deficit of 0.3 percent of GDP. The Ministry of Finance expects government spending to be in exact balance with revenues.

Dutch government debt shrinking fast

In 2001 the Dutch government debt amounted to 225 billion euro, 53 percent of GDP. This year the government debt will be reduced to 50 percent and in 2003 to 47 percent of GDP. Given the criterion of a maximum of 60 percent of GDP, the government debt no longer appears to be a problem for the EMU as far as the Netherlands is concerned.

Government debt: the Netherlands and the Eurozone

German deficit increasing

The German government deficit is in danger of nearing the norm of 3 percent of GDP. Indeed the European Commission had intended to issue a warning to Germany on the grounds of the Stability and Growth Pact, but refrained from doing so under German pressure. The German government did have to commit itself to keeping the deficit below 3 percent and aiming for a budget balance in 2004.

France no support for postponement

The French wanted to let go of the target of budget balance in 2004. They want to postpone this to 2007 because of the disappointing economic growth. However, they were not able to persuade the other euro countries of the need for this delay.

Government deficits and surpluses in the Eurozone

John Gebraad