Tuesday, December 22, 2015 - 08:31
Dutch central bank: More government budget cuts “inevitable”
More government budget cuts may be inevitable, according to Klaas Knot, president of De Nederlandsche Bank. "If the structural deficit increases, politicians will again have to take a critical look at government spending", he said in an interview with the Telegraaf. DNB estimates that the budget deficit will amount to 2.2 percent of the gross domestic product in 2016 and 2.5 percent in 2017. Last year it was 0.7 percent. According to the bank, the significant increase can be attributed to the 5 billion euros in tax cuts the government has planned for next year and the lower natural gas production. The European fiscal rules state that the budget deficit may not be over 3 percent of the GDP. That means that if it increases any further, "they will have to bend over again to get on a sustainable path", according to Knot. He could not say how much will need to be cut, because that depends on whether their estimates are realized. But according to Knot, the government needs to build up a "buffer".