2014 Autumn Memorandum: government budget on track

The 2014 Autumn Memorandum shows that the government will meet its fiscal targets this year. Its efforts to reduce the budget deficit are on track, despite the additional contribution that has to be paid to the EU. The year-end national debt will be lower than forecast. Expenditures and revenues are developing as projected in the 2015 Budget Memorandum. The budget therefore reflects the economic recovery.

The 2014 Autumn Memorandum has been approved by the cabinet at the proposal of finance minister Jeroen Dijsselbloem. ‘The fact that we will meet our targets shows how important it is to hold a steady course,’ he said.

The budgetary situation means that the one-off additional contribution of €1.1 billion can be paid to the European Commission before the end of the year. The net payment will be €642.7 million because the Netherlands is entitled to a €460 million refund. The extra payment is the result of recalculating EU member states’ gross national income (GNI).

The Netherlands argued that member states which are unexpectedly required to make an additional contribution should be allowed to pay it after 1 December. Member states now have until 1 September 2015 to do so. In deciding whether to make use of this option, the Netherlands took account of the effect on the budget balance, the remaining spending budget and cash management considerations.

The government has decided to charge the extra payment to the 2014 budget. Even after the payment is made, this year’s budget balance will still hit the earlier forecast of -2.9% of gross domestic product (GDP), thanks to windfalls elsewhere in the budget. ‘It is in the Netherlands’ interests to pay the amount this year since the budget allows it,’ said Mr Dijsselbloem. He pointed out this would not exceed the spending limit and would benefit cash management.

The Autumn Memorandum indicates how things stand in the current budget year. It does not incorporate the budgetary effect of the €460 million refund. The European Commission will draw up a new proposal concerning the timing of refunds in the light of member states’ plans to pay the extra contribution.

The Autumn Memorandum shows that the national debt is likely to be 69.4% of GDP at the end of the year. This is 0.4 of a percentage point lower than projected in the 2015 Budget Memorandum. A key factor was ING’s earlier repayment of the final €1.025 billion of the capital injection it received from the Dutch state in 2008. The state has now recovered the full amount of €10 billion.

The Memorandum also includes the expenditure that ministries have so far incurred as a result of the disaster involving flight MH17. The amount currently stands at €36.3 million, some of which can be accommodated within existing budgets.