More budget cuts are unnecessary, house price drop is healthy, says IMF

The Netherlands does not need to make any more cuts in order to get the state finances in order this year or in 2014, according to the International Monetary Fund.

IMF experts were in the Netherlands over the past two weeks to carry out research for a new report on the Dutch economy which will be published later this year.

The group’s leader Subir Lall told a news conference in The Hague on Tuesday it would not be wise for the Netherlands to take further steps to reduce its budget deficit.

While European rules are an ‘important and significant guidance’, this does not necessarily mean the Netherlands has to meet this rule this year or next, Lall is quoted by the Financieele Dagblad as saying.

‘The policy is credible and focused on structurally strengthening the economy,’ he said. ‘So it is good to continue that policy in this way.’ This is also crucial for Dutch companies and the general public, he said.

Housing market

Lall also said the 20% fall in house prices is ‘healthy’ and is taking place in good order, news agency Novum said in its report on the press conference.

Nevertheless, the government should take further steps, such as ensuring there are more rental homes outside the rent-controlled sector, Lall is quoted as saying.

In its last report on the Netherlands in 2011, the IMF warned that the Dutch housing market was vulnerable and called for restrictions on mortgage tax relief.

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