Dutch government guarantor for 46 billion euros worth of loans

03/11/2014 15:00

By the end of 2013 the Dutch government had provided 46 billion euros worth of debt guarantees for loans. Nearly 39 billion euros of these debt guarantees were made available by the central government, while local government acted as debt guarantor for over 7.5 billion euros.

Graph Debts guarantees by the central and local government, 2010–2013

Graph Debts guarantees by the central and local government, 2010–2013

Over 20 billion euros in debt guarantees for export credits

Debts guarantees are agreements where the guarantor – the government – is committed to pay any damages the lender may suffer if the borrower defaults. They are mainly guarantees for interbank loans and export credits.
The debt guarantees provided by central government increased by nearly 50 billion euros in 2009 when it provided guarantees on interbank loans within the framework of the financial crisis. In 2013 less than 10 billion euros was still outstanding, and by the end of 2014 this guarantee scheme will expire.
Over half of the guarantees are for export credits. The Dutch government uses export credit insurance to stimulate, mainly, the exports of capital goods and capital intensive services such as ship building and dredging projects.

Graph  Breakdown of government debt guarantees, 2013

Graph  Breakdown of government debt guarantees, 2013

Municipalities are the main debt guarantors in local government. In 2013 their debt guarantees amounted to over 7.5 billion euros. Municipalities provide debt guarantees to a wide variety of local parties, much of it goes to housing corporations or builders associations for housing construction or to care institutions or sports clubs.

Guarantees earned central government 166 million euros

There are always risks involved in providing guarantees. If a debt guarantee is called, the government must repay the outstanding loan, leading to an increase in government debt and deficit. In 2013 central government lost some 229 million euros. On the other hand, central government also was paid for providing the debt guarantees. This amounted to 395 million euros in 2013. So providing the debt guarantees provided a net yield of 166 million euros in 2013. Total debt guarantees came to 7.2 percent of GDP in 2013.