The Global Financial Crisis and its Budget Impacts in OECD Nations Fiscal Responses and Future Challenges
Fiscal Responses and Future Challenges
Edited by John Wanna, Evert A. Lindquist and Jouke de Vries
Chapter 6: Budgetary challenges in the Netherlands: resuming business after a turbulent time
In mid-2008 financial markets around the world were hit by a global financial crisis (GFC) that rapidly impacted on the real economy of many nations. In the Netherlands the financial crisis caused a recession heralding a period of negative economic growth not seen in many decades. Rather than exploring the origins of the downturn, this chapter analyzes the responses to the crisis through the lenses of public budgeting and the resilience of the Dutch budgetary system. Almost overnight the Dutch government was forced to move into crisis mode and take swift decisions to stabilize domestic financial markets. In a short period of time, budget decisions of enormous consequence were made by the Ministry of Finance, directly affecting the public budget and levels of state debt. Besides the government’s expedient interventions in the financial sector, other significant budget challenges were also on the horizon as a result of the changing demographic structures and increased imperatives to fund well-being. With an ageing population, the Dutch government was already confronting a ‘sustainability gap’ in its public finances, driven by increasing expenditures on old-age pensions and healthcare. The financial crisis served to intensify calls for substantial budgetary reforms to ensure future financial sustainability.
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