In the first six months of 2009, public debt has amounted to more than 356 billion (bn) euro, an increase by nearly 10 bn euro relative to the end of 2008. The government debt-to-GDP ratio was 61.1 percent. The Netherlands currently exceeds the EU ceiling set at 60 percent. The last time this occurred was in 1999.
Public debt, 2001-2009
New support actions thwart debt reduction
On 26 January 2009, the government took on 80 percent of the risks and profits of the American mortgage portfolio of ING Bank. The intervention caused public debt to grow by nearly 20 bn euro. At the same time, public debt was reduced as Fortis Bank redeemed a 34 bn government loan in the first half of 2009; 15 bn was put in deposit accounts and the remainder was used to reduce public debt.
Public deficit grows by nearly 11 bn euro
The public debt increase over the first six months of 2009 was caused by a deficit of nearly 11 bn euro, as against a surplus of more than 1 bn euro in the first six months of 2008. The deficit currently amounts to 3.7 percent of the GDP, above the European limit of 3 percent.
Public debt, 2001-2009
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.