Netherlands: Stable and Sustainable Budgetary Policy (Summary and Recommendations). Eleventh report Study Group on the Budgetary Margin

On 23 October 2000 the Dutch government asked the Study Group on the Budgetary Margin for recommendations on the budgetary policy to be pursued in the next government's term of office. In particular, it asked for advice on fiscal balance targets in the period from 2003-2006. This against the background of the ageing of the population and the analyses concerning this issue in the report 'Een verkenning van de schuldpolitiek op lange termijn' ('A study of debt policy over the long term'). The government pointed to the attainment of a 'close to balance or in surplus' situation by the Netherlands, in accordance with the Stability and Growth Pact. The government also sought advice on the main aspects of the current budgetary policy, such as the use of fixed real expenditure ceilings, the deflator for indexing this ceiling, the cautious economic assumptions and the spending reserve. In this context the extent to which the automatic stabilisers can operate freely also needs to considered. The government also asked the Study Group to devote attention to the financial positions of the social funds and to several technical matters such as the measurement of the tax-burden. The future work of the Study Group on the Budgetary Margin was raised during the debates on the budget in 2000 and on the Autumn Memorandum 2000. In the preparation of this report the Study Group took account of these debates, for instance by including several debt reduction scenarios and by analysing different for updating the expenditure ceilings methods