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29.12.

2000 EN Official Journal of the European Communities C 376/1

I
(Information)

COUNCIL

COUNCIL OPINION
of 27 November 2000

on the updated stability programme of the Netherlands for the period 1999-2004
(2000/C 376/01)

THE COUNCIL OF THE EUROPEAN UNION, years, the favourable scenario provides an appropriate basis for
the assessment of the budgetary position in the medium term.
Having regard to the Treaty establishing the European The Council considers that the programme fulfils the
Community, requirements of the Stability and Growth Pact.
Having regard to Council Regulation (EC) No 1466/97 of 7 July The Council welcomes the fiscal reform which will be imple-
1997 on the strengthening of the surveillance of budgetary mented in 2001 and which aims at reducing the tax burden
positions and the surveillance and coordination of economic and at fostering labour supply by reducing the replacement
policies (1), and in particular Article 5(3) thereof, rate. However, the structural deficit deteriorates in 2001. The
Having regard to the recommendation of the Commission, Council notes that inflationary pressures are emerging in the
present phase of strong economic growth; it considers that
After consulting the Economic and Financial Committee, such pressures might strengthen next year and in 2002,
under the impact of reductions in personal income taxes and
HAS DELIVERED THIS OPINION: of possible further tax alleviation in 2002. In view of these
On 27 November 2000, the Council examined the Netherlands’ risks, the Council encourages the Dutch Government to ensure
updated stability programme, which covers the period that the stance of fiscal policy will be firmly oriented to
1999-2004. The Council welcomes the presentation of the limiting inflationary pressures; to this end, it urges the
update of the stability programme shortly after the presen- government to allocate budgetary margins taking due
tation of the budget, as was recommended in the Council consideration of cyclical conditions, in particular in 2002,
Opinion of 31 January 2000 on the updated stability and to maintain strict control of government expenditure.
programme of the Netherlands, 1999 to 2002 (2), so that it The Council recommends that these considerations should
reflects the most recent economic data and forecasts. also prevail, taking account of macroeconomic developments,
when the Dutch Government shapes the budgetary policies in
Macroeconomic developments proved significantly better in the 2003 and 2004. Given the buoyant increase in disposable
Netherlands than was expected in the 1999 updated stability income in 2001, the Council considers that a moderate
programme. As a result, the general government balance in outcome of the current wage negotiations will be crucial in
both 1999 and 2000 improved significantly to a surplus of this respect.
1 % of GDP in both years as against a deficit of 0,6 % of
GDP projected in the 1999 update. The general government The Council commends the emphasis given in the updated
debt ratio to GDP is expected to fall to 56,6 % in 2000, below stability programme to structural improvement in the
the 60 % reference value. Real GDP growth will continue to be economy by the reorientation of government spending
dynamic in 2001, but, as a result of the fiscal reform to be towards longer term objectives in priority areas, such as
implemented in that year, the government surplus is estimated education, healthcare and investments in infrastructures; it
to be reduced to 0,7 % of GDP; however, the government debt notes with satisfaction that such a shift in spending is imple-
ratio should be further reduced to 52,3 % of GDP. The Council mented without prejudice to the respect of the ceilings in real
notes that the period 2002 to 2004 incorporates two years, terms imposed on expenditure. The Council welcomes the
2003 and 2004, which are beyond the term of the present consideration given in the updated stability programme to
government and that the estimates for the period 2002 to long-term sustainability of public finances in view of the
2004 are technical projections, within two macroeconomic impact of the ageing population. It considers that this
scenarios, under the assumption of unchanged policies from analysis would justify using much of the margin likely to
2002 onwards. become available from 2002 for accelerated debt reduction.
The Council considers that the 2000 update of the stability
The Council considers that, taking into account current strong programme is consistent with the broad economic policy
economic prospects for the Dutch economy in the next two guidelines.

(1) OJ L 209, 2.8.1997, p. 1.
(2) OJ C 60, 2.3.2000, p. 1.