Zalm warns more budget cuts might be needed

13 February 2004

AMSTERDAM — Dutch Finance Minister Gerrit Zalm warned on Friday that the government might have to cut deeper into its spending plans to prevent the budget deficit exceeding EU limits.

The extra cuts would come on top of the EUR 17 billion that the Cabinet plans to shave off its budget over the next four years.

He made his comments amid reports that the government think tank CBP is forecasting that the deficit might reach 3 percent or even 3.1 percent of Gross Domestic Product (GDP) this year. Under the Eurozone Stability Pact, the government has to keep within the 3 percent limit.

Zalm has been a severe critic of France and Germany for not sticking to the pact. The minister told commercial television station RTL on Thursday that extra cuts would be unavoidable if the Dutch deficit threatened to breach 3 percent. “But I cannot make any definite statement at this stage,” he said.

The CPB is to issue its latest calculations about the economy and spending to the Cabinet next week.

Late last year the CPB estimated that the 2004 deficit could reach 3 percent. But Zalm dismissed this, indicating it would at worst hit 2.7 percent of GDP.

Subject: Dutch news