New cabinet to ditch cautious growth rule

Wednesday 31 January 2007

The next Dutch government is set to base its financial planning on economic growth estimates that are higher than the ‘cautious’ forecasts drawn up by its think-tank, the Financieele Dadblad reported on Wednesday.

The CPB think-tank has estimated that the economy will grow 1.75% a year, which will boost the government’s coffers by €6.5bn. But sources say the three parties forming the new cabinet -Christian Democrats, Labour and ChristenUnie - are considering taking the more ‘realistic’ figure of 2% as their growth estimate.

This would give the cabinet an extra €2.2bn to spend on new policy initiatives. Labour leader Wouter Bos – tipped to be the new finance minister – is particularly keen to ditch the stringent budgetary approach adopted by Gerrit Zalm who has headed the department for the past 12 years.

Under Zalm, the frequent windfalls from extra growth were earmarked to cut debt. Zalm said in a reaction that it would not be sensible to break with his standards. Even with cautious growth estimates, the treasury still has to cope with financial setbacks, he said.

The three party leaders - Jan Pieter Balkenende, Wouter Bos and André Rouvoet - continued to work on finalising their coalition agreement on Wednesday. Sources told ANP that they still had disagreements on plans to introduce a general amnesty for long-term refugees.

© DutchNews.nl

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