The Dutch government is considering a deficit-finance stimulus program, prioritizing infrastructure, research, and education the government said on Thursday.
The plan would entail the Netherlands borrowing an additional €50bn on the current historically low or negative interest rates, the Dutch De Telegraaf daily reported earlier on Thursday. Finance Minister Wopke Hoekstra said last month he would look at ways to use negative bond rates to increase public investments.
Citing government sources, De Telegraaf suggests that the stimulus program could be incorporated in the 2020 budget law, while the four-party government is looking for ways to guarantee the responsible use of the funds. In this context, the parliamentary debate could open as soon as September 17.
The Dutch export-led economy is feeling the weight of the prospect of a disorderly Brexit and the slowdown of the German economy. Three successive Mark Rutte Netherlands pursued far-reaching fiscal consolidation measures over the last decade, reducing its debt-to-GDP ratio, but at the cost of higher inequality, political fragmentation and polarization. The Hague is now following Berlin in reviewing the economic conventional wisdom, planning a stimulus program that could provide a significant boost to the fifth biggest economy in the EU.