Monday

28th May 2018

Opposition parties rescue Dutch budget plan

  • Groenlinks warned the plan might unravel depending on who wins snap elections in September (Photo: zemistor)

Opposition parties in The Netherlands have salvaged budget-cutting plans designed to protect the country's triple-A rating and to meet EU targets.

The left-wing Christenunie, the liberal D66 and the Groenlinks parties on Thursday (27 April) got behind the minority caretaker government of centre-right leader Mark Rutte to give him a 77-out-of-150 majority in parliament for the measures.

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Details of the €10-billion-or-so package are to be worked out at a later stage.

The basket includes: less spending on healthcare; increasing retirement age from 66 to 67; more VAT; and a two-year pay freeze for most civil servants. The opposition also shoehorned in higher taxes on alcohol, fossil fuels and sugary soft drinks.

The cuts are aimed at reducing the Dutch deficit to 3 percent next year in line with EU rules.

The 11th-hour deal comes ahead of a European Commission deadline for EU capitals to submit economic "convergence plans" to Brussels by Monday. It also comes after ratings agency Fitch said The Hague could lose its top-notch grade.

"Sticking to the 3 percent rule is not because that has been decided in Brussels but because we think it's important as we can't pass the bill on to future generations," Rutte told parliament.

"At the EU level, the absolute priority is restoring the stability of the eurozone. At the national level, the task is ... to lower private and public debt levels and to prepare for increases to government spending on healthcare and pensions as the population ages," the finance ministry said in a statement.

For her part, Groenlinks chief Jolande Sap warned the plan might unravel depending on who wins snap elections in September.

The opposition Labour party, Socialist party and the PVV faction are against the measures. "This is a bad package and people with a state pension will pay the bill," the PVV's populist leader, Geert Wilders, told MPs.

The triple-A ratings warning came after Rutte resigned on 23 April because Wilders said No to an even bigger austerity plan. The PVV was not a formal coalition partner, but Rutte had relied on its support to get bills through parliament.

"This is an unbelievable achievement," Rutte told MPs on Thursday, after clinching the new deal despite the political crisis.

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While the Greek government has committed to fulfill the last creditors' requirements in the coming month, Europeans and the International Monetary Fund are still far from an agreement on measures to reduce the country's debt in the future.

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