The Netherlands has already borrowed 66 billion to finance all the coronastun

At the end of March the moneylocks will be open at the central government. Meanwhile, the Netherlands is almost ready for the third major support package for entrepreneurs. For the state treasury, the Ministry of Finance has already borrowed 108 billion euros this year, most of it because of corona. Before the corona crisis, the ministry was planning to borrow ‘only’ 42 billion euros this year.

One of the extra billions that the various ministries needed was to pay for the almost sixty different emergency measures. An overview from the Ministry of Finance shows that more than 37 billion euros have already been reserved for the measures so far.

Most of this went to entrepreneurs in the form of wage support for their staff (NOW). Together with support for self-employed persons (Tozo) and an allowance for fixed costs (TOGS and TVL), these formed the first two large support packages.

In addition to the emergency measures, the tax measures also cost money. For example, no more VAT is charged for mouth caps and entrepreneurs are allowed to set off this year’s expected loss against last year’s profit for their tax statement.

Sober

The amounts in the overview of the central government are reserved amounts. In reality, some costs are lower so far. For the first NOW package, for example, more than 9 billion has been set aside. Ultimately, the UWV paid out almost 8 billion to approximately 140,000 entrepreneurs

For the second NOW package more than 40,000 companies have reported so far, much less than in the first period. For the time being, the costs amount to 1.5 billion euros, reported by the UWV this week. The Ministry of Social Affairs and Employment had set aside more than 12 billion euros for this second round of wage subsidies.

How does the Netherlands pay this?

“From March onwards, the need for money increased enormously,” says a spokesman for the Ministry of Finance. The Netherlands puts out loans on the financial markets almost every week to have enough money in cash for all coronasteun.

In March Minister Wopke Hoekstra (Finance) said that he needed to borrow 45 to 65 billion euros to mitigate the economic impact of the coronavirus measures

‘Already raised 108 billion euro’

The amounts borrowed by now have increased considerably. In June, the Ministry estimated the ‘financing requirement’ for this year at 138.8 billion euros. In December, the need was still 42 billion euros. The remaining more than 90 billion euros are needed by the Ministry to tackle the corona crisis.

“This year the ministry has already raised 108 billion euros,” says the spokesperson. “But 13 billion has already been repaid.” That means that the Netherlands can still borrow about 44 billion euros until it reaches the border, which was estimated in June. Whether that is actually necessary, remains to be seen and depends, among other things, on how many entrepreneurs want to make use of the support packages.

years, the Netherlands has reduced its national debt to around 400 billion euros by the end of 2019. That was less than 50% of the gross domestic product (GDP) at that time. This means that the Netherlands did have some room to borrow.

With the other euro countries it has been agreed that this percentage may not exceed 60 percent. It remains to be seen whether the Netherlands will remain below this percentage now that the urge to borrow has hit hard. On Budget Day, more will become clear about the current ratio of national debt to GDP.