Dutch public debt continues to drop

In the first half of 2017, the Netherlands’ government debt fell by nearly 14 billion euros to 421 billion euros. It is the lowest debt ratio since 2010, i.e. 58.7 percent of gross domestic product (GDP). Public debt was lower due to a budget surplus of 4 billion euros and proceeds from the sale of financial assets. On an annual basis, the government balance represents a surplus of 1.1 percent of GDP, according to figures released by Statistics Netherlands (CBS).

Government debt as a percentage of GDP on an annual basis is referred to as the government debt ratio. At the end of 2016, the debt ratio still stood at 61.8 percent, exceeding the EMU target of 60 percent at the end of a calendar year. Changes in government debt and GDP developments affect the debt ratio. Part of 3.1 percentage point decrease in the first half of 2017, i.e. 1.2 percentage points, was on account of GDP growth.

Government debt, annually and quarterly
 EMU targetDebt-to-GDP ratio
2008 Q16043.5
2008 Q26043.5
2008 Q36044
2008 Q46054.7
2009 Q16057.6
2009 Q26056.7
2009 Q36057.2
2009 Q46056.8
2010 Q16057.6
2010 Q26059.3
2010 Q36059.1
2010 Q46059.3
2011 Q16059.4
2011 Q26060.3
2011 Q36061
2011 Q46061.6
2012 Q16062.4
2012 Q26063.9
2012 Q36065
2012 Q46066.3
2013 Q16066.7
2013 Q26068.4
2013 Q36068
2013 Q46067.8
2014 Q16067.4
2014 Q26068.8
2014 Q36068.2
2014 Q46068
2015 Q16069
2015 Q26066.7
2015 Q36065.8
2015 Q46064.6
2016 Q16064.3
2016 Q26063.2
2016 Q36061.5
2016 Q46061.8
"17 Q16059.6
"17 Q26058.7

Public debt down by 14 billion euros

The 14 billion euro decline in government debt was partly due to the sale of financial assets. In the first half year, for example, the Dutch State sold shares in ASR at a value of over 2 billion euros as well as a part of its interest in ABN AMRO to the amount of 1.5 billion euros. In addition, termination of interest rate derivatives yielded over 2 billion euros for central government.

Aside from the sale of assets, the State also received a one-off remittance exceeding 3 billion euros from the European Union in Q1 as part of a reduction in EU contributions. Furthermore, treasury banking by local authorities increased by 2 billion euros, which meant less central government borrowing outside the government. Mutual debts among Dutch authorities are not taken into account in calculating public debt.

Rising revenues and stable expenditure

Public debt decreased not only due to the sale of financial assets, but also due to a positive balance of public revenues and expenditure. Expenditure was up by more than 5 billion euros in the first half of 2017 relative to 2016, mainly as a result of higher tax revenues. Wage and income tax and social premiums yielded nearly 4 billion euros more, corporation tax 1 billion euros more. Partly due to higher household consumption and a higher number of houses sold during the first two quarters, VAT and transfer tax revenues were also higher.

Public expenditure remained at a level similar to recent years. Higher revenues and stable expenditure resulted in an annual budget surplus to the amount of 8 billion euros for the period Q3 2016 to Q2 2017, i.e. 1.1 percent of GDP. The CPB Netherlands Bureau for Economic Policy Analysis estimates a positive government balance of 0.6 percent of GDP in its Macro Economic Outlook for 2017.

Public revenues and expenditure on an annual basis
 Public revenuesPublic expenditure
2008 Q1267.4265.6
2008 Q2272.2270.2
2008 Q3276.8273.6
2008 Q4279.8278.4
2009 Q1277.8283.3
2009 Q2273.1286
2009 Q3269.8292.7
2009 Q4263.9297.5
2010 Q1264.1298.5
2010 Q2268.4303.2
2010 Q3268.4303.7
2010 Q4272.6304.1
2011 Q1275.7303.8
2011 Q2274.2303.3
2011 Q3277.8302.9
2011 Q4274.4302
2012 Q1275.2302.6
2012 Q2277.5303.1
2012 Q3276.2303.7
2012 Q4278.8303.9
2013 Q1281.7301.3
2013 Q2284.1301.5
2013 Q3287302.4
2013 Q4286.5302
2014 Q1285.9305.9
2014 Q2287.3306.9
2014 Q3288.2305.9
2014 Q4291.2306.2
2015 Q1292.6306.6
2015 Q2291.6306.4
2015 Q3291.8306.4
2015 Q4292.7306.8
2016 Q1294.5307
2016 Q2300.3307
2016 Q3305.4307.9
2016 Q4307.8305.2
"17 Q1312.2304.9
"17 Q2313.2305

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