Dutch gov't borrowed €66 billion for Covid support
The Ministry of Finance already borrowed 108 billion euros this year, the vast majority of which is reserved to fund the nearly 60 different emergency measures to help the country through the coronavirus crisis. Before the crisis struck, the government planned to borrow only 42 billion euros this year, NOS reports based on an overview from the Ministry of Finance.
So far the government reserved 37 billion euros for the first two sets of coronavirus support measures. The biggest amount, 18.8 billion euros, was reserved for the NOW regulation to help struggling businesses pay their staff. The support package for self employed persons, TOZO, had 4 billion euros reserved for it. And the allowances for fixed costs, TOGS and TVL, had 1.4 billion euros. Another 1.4 billion euros were set aside for bonuses for healthcare staff. And 1.3 billion euros to guarantee the availability of public transit.
Money also went to tax measures. For example, VAT was scrapped for face masks. And entrepreneurs can set off their expected loss for his year against their profit on their tax return. Tax revenues are also expected to be around 25 billion euros lower this year. And the costs for unemployment benefits and social assistance 1.5 billion euros higher. All in all, the government allocated 66 billion euros to cover these costs.
These all involve reserved amounts. In reality, some of the expected costs have been lower so far. For example, the government set aside over 9 billion euros for the first NOW package, but benefits agency UWV only paid out almost 8 billion euros to about 140 thousand entrepreneurs. The government reserved 12 billion euros for the second round of wage subsidies, but the number of companies who needed it was far lower at over 40 thousand and the costs currently amount to 1.5 billion euros.
The Ministries are currently working on a third support package. How much money will be set aside for this package is not yet clear. Sources told Dutch media that this package will last much longer than the first two, running until the summer of 2021, but that the measures will be less generous and that fewer companies will be able to qualify for support.
The euro countries all agreed that countries' national debts must not exceed 60 percent of their gross domestic product (GDP). Over the past years, the Netherlands managed to reduce its national debt to around 400 billion euros at the end of 2019, less than 50 percent of the GDP at the time. Which means that the country has some room to borrow. Whether the Netherlands can remain below the agreed upon 60 percent of GDP remains to be seen. More will be made clear on Budget Day next month.