The Dutch cabinet should reel in its expansionary fiscal policy as it is currently too close to the guardrails, the Council of State, an advisory body to the Dutch government, wrote in its spring report published on Monday.
As part of its first fiscal assessment of the year, the Council of State harshly criticised the recent trend of increased public spending, notably accentuated by the COVID-19 pandemic and the war in Ukraine.
“The [consultancy] department […] notes that […] the Dutch budget does not meet the requirements from the preventive arm of the European budgetary rules (the Stability and Growth Pact) for 2022, 2023 and 2024,” the Council states in its report.
“With a budget deficit of 3 % of GDP in 2023 based on the Central Planning Office’s Central Economic Plan estimate, the government is also steering close to the guardrails, leaving no room for absorbing any setbacks and for conducting trend-based fiscal policy in the event of a cyclical downturn,” it adds.
The report also warns the current cabinet to not burden future governments with financial deficiencies. It takes the recent aid package to the earthquake-ridden province of Groningen as an example, as the cabinet decided to take on extra debt instead of cutting expenses in other areas.
“These burdens are being passed on to future generations,” State Councillor Richard van Zwol told NOS concerning the aid package. “This means there is a task for future cabinets to solve this.”
The Council also criticised the cabinet for not presenting a clear-cut overview of “the coverage statement, intensifications and budget cuts”, which causes the government’s not to merely be “partially insightful and comprehensible”.
The Council advises the cabinet to introduce a fixed deadline for the budget statement process and to look for ways to create budget room to soften potential fiscal blows.
The cabinet is set to present its annual budget statement on Prinsjesdag on 19 September.
(Benedikt Stöckl | EURACTIV.com)
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