Dutch government says 2020 debt-to-GDP to hit 57.4% due to coronavirus support

FILE PHOTO: Dutch Finance Minister Wopke Hoekstra reacts at the start of an euro zone finance ministers meeting in Brussels, Belgium, November 6, 2017. REUTERS/Eric Vidal/File Photo

AMSTERDAM (Reuters) – The Dutch government expects its debt-to-GDP ratio to have risen to 57.4% by the end of 2020 as a result of heavy spending to support the economy during the coronavirus pandemic, it said on Monday.

Dutch debt to gross domestic product (GDP) stood at 48.7% at the end of 2020, making it one of the few countries to adhere to euro zone rules that allow a maximum of 60%.

The budget deficit will be around 6.2% this year, the finance ministry said, high but below a forecast of 7.2% given by Finance Minister Wopke Hoekstra in September.

The country’s economy performed better than expected in the late summer and fall before a second wave of COVID-19 cases led to a second, partial lockdown that is ongoing.

“The Cabinet has spent billions on one-time support to prevent mass bankruptcies and unemployment,” the ministry said in a statement.

The government ran a budget surplus of 1.7% in 2019.

Last week the government’s economic forecasting agency said it expects economic growth to rebound by 2.8% in 2021 after contracting 4.2% this year.

Reporting by Toby Sterling; Editing by Jan Harvey

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