Budget surplus of almost 3 bn euros in 2016

The Dutch government achieved a 2.9 billion euro budget surplus in 2016, equivalent to 0.4 percent of gross domestic product (GDP). Twelve months previously this was still a 2.1 percent budget deficit. Government debt has declined since 2015 and stood at 62.3 percent of GDP by the end of 2016, Statistics Netherlands (CBS) reports today.

These figures are also included in an official report to the European Commission today.
The last time the Dutch government achieved a surplus was in 2008. In the following year, a deficit of 5.4 percent was recorded due to the outbreak of the global financial crisis. The government went from a 33.5 bn euro deficit in 2009 to a 2.9 bn surplus in 2016.

Revenues up since crisis, expenditure stable

After a sustantial deficit was recorded in 2009, which caused the Netherlands to enter the Excessive Deficit Procedure, public revenues increased substantially while public expenditure was reduced. Revenues saw a rise from 43 bn euros in 2009 to 307 bn euros in 2016, although revenue growth was affected by the reduction in natural gas revenues. The latter declined from over 10 bn euros in the period 2008–2014 to over 2 bn euros in 2016. Since 2010, public spending has stabilised at slightly over 300 bn euros. Total expenditure in 2016 came to 304.1 bn euros.

Tax and social security burden at record high

In 2016, public revenue went up by 14 bn euros on 2015 and this was attributable to a rise in tax revenues and social contributions, which came to a total of 17 bn euros. As a result, the burden imposed by taxes and social security contributions ended at a record high of 38.7 percent. Revenues from wage and income taxes and social security contributions increased by nearly 7 bn euros. VAT and corporate tax revenues rose by nearly 4 and 5 bn euros respectively. Corporate tax revenues increased by one-third. Economic growth often has a delayed effect on corporate taxes, since losses from previous years can be offset against taxable profits in other years. Once the deferred losses have been processed, corporate taxes may suddenly increase sharply, as happened last year. Lower natural gas revenues had a downward effect on revenues to the amount of 3 bn euros.

Modest decrease in public expenditure

Public spending was reduced by an amount of almost 3 bn euros in 2016. Remittances to the EU decreased by nearly 4 bn euros; this decrease included a one-time reduction (granted retroactively) of national contributions. Interest charges were nearly 1 bn euros lower. On the other hand, expenditure was raised on wages and salaries of civil servants as well as social security costs. Spending on social benefits rose by 3 bn euros, mainly on account of increased health care spending and higher AOW state pension costs.

Government deficit and debt
 Deficit (left-hand axis)Debt-to-GDP ratio (right-hand axis)

Debt reduced by 7 bn euros

At the end of 2016, government debt stood at 434 bn euros, a decline of 7 bn euros on twelve months previously. The gross debt ratio was 2.9 percentage points lower and amounted to 62.3 percent of GDP. This is still above the European debt-to-GDP criterion of 60 percent. The gross debt ratio was 67.9 percent of GDP in 2014. The decline is not only the result of debt repayments but to a large extent also due to a rise in GDP, the so-called denominator effect. Without debt repayment in 2016, the gross debt ratio would have declined by 2 percentage points.
The government was able to reduce public debt with funds released from financial assets.The settlement of interest rate derivatives yielded an amount of 6.5 bn euros. In addition, over 3 bn was generated by the sale of shares in ABN AMRO Bank, insurance company ASR and SNS Bank’s former property finance branch Propertize, and used towards recovering debt.