Netherlands unveils EUR 6 billion stimulus plan

26th March 2009, Comments 0 comments

Dutch Prime Minister Jan Peter Balkenende presented a EUR 6-billion stimulus plan on Wednesday, but plans to increase the retirement age remain vague.

THE HAGUE – Dutch Prime Minister Jan Peter Balkenende on Wednesday unveiled a EUR 6-billion stimulus plan for 2009 and 2010, but warned of cost-cutting from 2011 to bring down deficits.

"There is a stimulus plan for 2009 and 2010... for which EUR 6 billion are available," Balkenende said in the lower house of parliament.

He said cuts will not kick in until 2011. In that year the national budget deficit is expected to have risen to 5.7 percent. After 2011 the aim is for the deficit to be lowered by half a percentage point every year.

"The other side of the coin is that public debt is increasing at a high rate," he said, adding that the public deficit would be cut from 2011.

The plan – equivalent to about one percent of gross domestic product (GDP) – includes investment for road construction, speeding up planned investments in infrastructure, funding for renewable energies and the abolition of the controversial environment tax on air travel that has plagued Schiphol Airport since it was implemented in 2008.

In order to stabilise employment rates, the government will also introduce part-time unemployment benefit and focus on youth employment.

As he outlined the plan negotiated within his centre-left coalition over the past three weeks, the Dutch prime minister said a further EUR 1.5 billion would be invested by Dutch provinces and municipalities.

In order to cut deficits by at least 0.5 percent of GDP per year from 2011, Balkenende confirmed media reports that the retirement age be raised from 65 to 67 and lowering public health costs, but has yet to reveal more details.

Unions and employers' organisations expressed their general support for the measures after lengthy discussions that lasted into the early hours of Wednesday morning.

The unions had their reservations about the raise in retirement age, but dropped them after ministers guaranteed that the disputed raising of the retirement age could be replaced with alternative measures yet to be proposed by the independent Social and Economic Council. While the union agreed to wage restraints, their proposal to grant the overstretched pension funds more time to recover from the crisis was accepted by the cabinet.

Critics of the stimulus plan said the crisis plan was vague and that the government had taken too long to act. Opposition party Green Left criticised the crisis plan as “vague”, and conservative VVD leader Mark Rutte said the cabinet was "procrastinating".

In 2008, the Netherlands launched a stimulus plan for companies worth EUR 6 billion and injected EUR 13.75 billion into the financial system, as well as buying the Dutch operations of Fortis bank for EUR 16.8 billion.

The Lower House will debate the plans on Thursday.

AFP / Radio Netherlands / Expatica

0 Comments To This Article