Assessing Dutch Fiscal and Debt Sustainability

Benjamin Carton and Armand Fouejieu

No 2020/269, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: 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 (search for similar items in EconPapers)
Pages: 26
Date: 2020-12-04
New Economics Papers: this item is included in nep-cmp
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