The economic recovery that started in 2010 weakened during the year 2011. This resulted in a new setback for government finances. This is the main conclusion from the National Financial Annual Report 2011 (NFAP). It is further apparent from the NFAP that the government has realised all savings planned for 2011. In addition the Netherlands complies amply again with the standard as regards the rightfulness of the expenditure.
Budget deficit and public debt
The budget deficit (EMU deficit) of 2011 amounted to 4.7% of the gross domestic product (GDP). In total, the central and local government spent € 28 billion in excess of the income. Even though this is an improvement with regard to 2009 and 2010, the decrease of the budget deficit lags behind the deficit that was estimated earlier, which was 4.0% GDP in the coalition agreement. The difference can largely be ascribed to the slower than projected economic growth, which automatically impacts tax revenues. In total the tax receipts amounted to € 6.8 billion less, in particular because of the lower revenues from tax on profits, VAT and transfer tax. Contrary to the budget deficit, the public debt (EMU debt) has developed a bit more favourably than expected. The year 2011 was concluded with a debt of € 393 billion (65.2% GDP), which is € 23 billion more than a year before.
Today – Accountability Day – minister of Finance Jan Kees de Jager has officially handed over the Annual Financial Report and the other accountability documents to parliament. In his speech, the minister paid much attention to the high budget deficit and the increased debt: ‘The figures are disturbing. The combination of a high deficit, an increasing debt and an ageing population demands strong measures. It is a problem we cannot pass on to the future and the generations after us.’
European debt crisis
The year 2011 was mainly dominated by the European debt crisis. The Annual Financial Report gives a survey of the important moments and of the Dutch efforts in the areas of crisis control and crisis prevention. In September the government presented an outlook for the future on the European and Monetary Union (EMU). The outlook emphasises budgetary discipline, compliance with the European budgetary rules and a severe independent supervision. The outlook for the future was filed with the European Council, in which the heads of government agreed on an integrated approach of the debt crisis. In addition the Netherlands successfully argued in favour of a strong role of the International Monetary Fund in controlling the debt crisis and for a substantial contribution of the private sector to the second bailout package for Greece.
Budgetary savings, and legality and regularity
The € 18 billion package from the coalition agreement included various measures for 2011 with budgetary savings amounting in total to € 2.8 billion. This amount has been realised. 95% was entirely carried out according to plan. The remaining 5% concerns alternative measures or a slight delay, but in all cases sufficient financial coverage has been provided. The National Financial Annual Report further reveals that the operations of the central government are in order, as in the previous years. With 99.76%, the legality and regularity of the expenditure again amply exceeds the standard set. The Netherlands has consciously set high standards with regard to rightfulness. Where a materiality of 2% is used for European expenditure, this limit has been 1% in the Netherlands for years now.
The full Annual Financial Report, the departmental annual reports and all other accountability documents can be inspected via the websites www.verantwoordingsdag.nl and www.rijksbegroting.nl.