Kingdom of the Netherlands—Netherlands Selected Issues
IMF Staff Country Reports, September 22, 2004
Source details
- Canonical URL
- Kingdom of the Netherlands—Netherlands Selected Issues
Other formats
Bibliographic details
- Published: September 22, 2004
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451829464.002
Summary findings
- Fiscal deterioration during economic slowdowns is not unusual and can be justified on economic grounds.
- Although the real spending ceilings were largely adhered to, procyclical elements embedded in the fiscal framework contributed to the structural fiscal deterioration.
- Sharp declines in the revenues from corporate profit taxes and social security contributions, as well as increases in social security spending, were largely responsible for the cyclical deterioration.
Analysis themes
- Fiscal framework performance
- Real spending ceilings: largely adhered to.
- Procyclical elements: embedded in the fiscal framework and contributed to structural fiscal deterioration.
- Revenue and expenditure drivers of deterioration
- Revenues: sharp declines in corporate profit taxes and social security contributions.
- Expenditures: increases in social security spending played a major role in cyclical deterioration.
Policy implications and considerations
- Recognize that fiscal deterioration during economic slowdowns can be economically defensible, but distinguish cyclical from structural drivers.
- Reassess fiscal framework design to mitigate procyclical elements that can exacerbate structural deterioration.
- Monitor and address volatility in corporate profit tax revenues and social security contributions to improve resilience.
- Evaluate social security spending policies to manage cyclical pressures without undermining automatic stabilizers.
Content in this bundle
- Kingdom of the Netherlands--Netherlands: Selected Issues