Assessing Dutch Fiscal and Debt Sustainability

Assessing Dutch Fiscal and Debt Sustainability
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Volume/Issue: Volume 2020 Issue 269
Publication date: December 2020
ISBN: 9781513557496
$18.00
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Topics covered in this book

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Economics- Macroeconomics , Public Finance , Debt , fiscal deficit , sustainability , stochastic simulations , , WP , increase warrant , debt target , debt reduction objective , envisaged fiscal policy path , debt issuance , stochastic simulations , SGP deficit , debt level , Government debt management , Fiscal stance , Fiscal risks , Global

Summary

Although the Netherlands entered the so-called Great Lockdown with a strong fiscal position, the Dutch fiscal balance is projected to deteriorate by an unprecedented magnitude, largely as a result of necessary fiscal measures deployed to weather the economic impact of the COVID-19 pandemic. This paper performs a stochastic analysis of risks to Dutch fiscal and debt sustainability over the next decade, taking into account alternative recovery scenarios and associated fiscal consolidation paths and also a range of macroeconomic shocks drawn from the historical experience of the Netherlands. The simulations show that even under significant downturn scenarios and assuming an initially less favorable fiscal position due to persistent economic effects of the pandemic, risks to the Dutch fiscal and debt sustainability would remain contained.