AMSTERDAM − Adding to previously announced record budget cuts, Finance Minister Gerrit Zalm has scrounged up an extra EUR 750 million in savings for 2005, but will meet resistance from government coalition party Democrat D66 later on Friday.

Despite the additional cuts, Social Affairs Minister Aart Jan de Geus reached an agreement with Zalm on Thursday sparing cutbacks to the amount and duration of WW unemployment benefits. But he also stressed the full Cabinet must agree on the new measures on Friday.

And De Geus was also forced to yield ground in other areas of his ministry’s budget, which will contribute EUR 186 million to the savings. Restricting redundancy payments will yield about EUR 150 million, news agency ANP reported.

The Social Affairs Ministry will also supply savings by increasing the age that older unemployed workers can come into consideration for IOAW benefits from 50 to 55. The IOAW scheme is for older unemployed workers or partially incapacitated workers.

Health Minister Hans Hoogervorst and Education Minister Maria van der Hoeven have also contributed large sums to the government’s latest economising drive, with the healthcare budget being forced to cut EUR 100 million.

The Education Ministry intends to save EUR 150 million by increasing college fees, while the government-financed supply of a public transport ov-jaarkaart − which allows students on study financing to travel freely on trains, trams and buses − will be changed into a loan.

Discussions over extra savings have proven difficult in recent weeks, raising prospects that a decision might be delayed until August. But Liberal VVD Minister Zalm now hopes that the entire Cabinet will back his plans at its weekly meeting on Friday.

The government announced a record EUR 17 billion in budget cuts last year to reduce the budget deficit to 0.5 percent of Gross Domestic Product (GDP) in 2007.

Further cuts amounting to EUR 2.9 billion were made earlier this year after it was revealed that the deficit breached the 3 percent maximum imposed by the euro stability pact in 2003 and threatened to breach the limit again this year.

But the cuts have not ended and the Cabinet will discuss the exact consequences of its latest savings drive in August.

At this early stage though, it appears likely that Dutch residents on social security benefits will lose 2 percent of purchasing power. Employed workers will only lose 1 percent next year, Dutch public news service NOS reported.

For the time being though, for the Christian Democrat CDA, one of the largest obstacles for an accord was removed with the guarantee that the level and duration of WW unemployment benefits will not be reduced. Minister De Geus also welcomed the agreement on Thursday.

Third coalition party Democrat D66 is extremely displeased about the cuts to the education budget. The party said it did not understand why cuts were not made to WW benefits, while the “knowledge economy” took another dent.

“De Geus’ joy is extremely premature,” the D66 said.

[Copyright Expatica News 2004]

Subject: Dutch news