Netherlands achieve 2.9 billion budget surplus; economic growth stronger expected

By Janene Pieters on March 24, 2017 - 08:57

After years of a budget deficit, the Dutch government managed to achieve a budget surplus in 2016. And that surplus is even 14 times larger than previously expected - a massive 2.9 billion euros, according to Statistics Netherlands on Friday. The Dutch economy also gew more than expected in previous estimations, RTL Nieuws reports.

Over 2016 the Dutch economy grew by 2.2 percent. The pervious estimation was 2.1 percent. The economy is doing better on all fronts. About 100 thousand jobs were created last year and unemployment decreased at the strongest rate in 10 years. Which is why the government can boast with a budget surplus - more money received than spent - for the first time since the economic crisis in 2008.

Last month Finance Minister Jeroen Dijsselbloem announced that 2016 ended with a budget surplus of 200 million euros. The final figures, which also includes figures from provinces, municipalities, and water boards, has te budget surplus at a massive 2.9 billion euros. The last time the Netherlands had a surplus was in 2008 with a surplus of 1.4 billion euros.

In the 2016 Budget a deficit of 1.1 percent of gross domestic product was expected. In late November the estimates were adjusted to a deficit of 0.4 percent.

According to Statistic Netherlands, the government's revenue amounted to 307 billion euros last year, an increase of 14 billion euros compared to 2015. The increase can be attributed to higher income from taxes and social contributions. The government's spending mounted to 304 billion euros, 3 billion less than in 2015. This decrease can be attributed to the Netherlands paying 4 billion euros less to the European Union in 2016.

The higher than anyone expected surplus is an even bigger achievement when considered that 2016 was also the third consecutive year in which natural gas production was significantly decreased, a major source of income for the Netherlands. The surplus shows that this negative effect has been compensated for.

The surplus also reduced the government debt to 434 billion euros, or 62.3 percent of GDP.

According to RTL, Dijsselbloem previously advocated for not spending financial windfalls like this surplus. According to him, building buffers should currently be a priority, because of the uncertainty resulting from the Brexit, developments in the United States following Donald Trump's election, and the outcome of a referendum in Italy that resulted in Prime Minister Matteo Renzi's resignation in December. Whether or not this will actually happen is up to the new cabinet.