Zalm to wield the budget knife again

27 February 2004

AMSTERDAM — Dutch Finance Minister Gerrit Zalm has confirmed that he will have to slash deeper into government spending to prevent the budget deficit rising above 3 percent of Gross Domestic Product (GDP).

Under the euro-zone stability pact, the deficit cannot top 2.9 percent of the national debt. Zalm has been a severe critic of France and Germany for ignoring this basic rule.

Earlier this month, the Dutch government’s macroeconomic think-tank CBP predicted that the country’s deficit was going to hit 3.3 percent of GDP for 2004 if action was not taken to stop it.

The centre-right Dutch coalition has already agreed spending cuts totalling EUR 17 billion over four years in a bid to reduce the deficit to 0.5 percent of GDP by 2007.

Speaking after Friday’s Cabinet meeting, Zalm said additional measures would have to be taken, but he declined to go into specifics. He had hoped that the deficit would be limited to 2.7 percent of GDP this year.

Subject: Dutch news