Dutch Parliament Backs Government Guarantee for Central Bank

A majority of Dutch lawmakers backed a 5.7 billion-euro ($7.5 billion) guarantee the government gave to the central bank, a move that should help ease the nation’s budget deficit.

The state provided a guarantee covering loans the central bank provided to the European System of Central Banks, the government said on Feb. 15. The state expects to earn about 3.2 billion euros from the commitment between 2013 to 2017 and the budget gap will be reduced by 813 million euros this year and 877 million euros in 2014, the government said. The central bank and the Ministry of Finance haven’t explained how these amounts were calculated.

“This is a one big trick to make yourself rich with money that isn’t there,” Tony van Dijck, a lawmaker from the opposition Freedom Party, said in parliament in The Hague today. Lawmakers from the Liberal VVD party and the Labor Party that make up the government coalition led by Prime Minister Mark Rutte defended the move.

The government may cut the 2014 budget by as much as 4 billion euros to keep the deficit within European Union limits, RTL-Z reported yesterday, citing people with knowledge of the matter. The cuts would come on top of a 16 billion-euro austerity package in the next four years.

To contact the reporters on this story: Fred Pals in Amsterdam at fpals@bloomberg.net; Corina Ruhe in Amsterdam at cruhe@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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