Dutch Funding Need Forecast Dropping to 84 Billion Euros in 2016

  • Debt redemptions scheduled to decline in 2016 compared to 2015
  • Funding estimate exclude receipts on possible IPO of ABN Amro

The Netherlands plans to borrow about 84 billion euros ($96 billion) in 2016, 11 billion euros less than the financing needed for 2015 as the country faces fewer redemptions of its government debt.

The government intends to redeem 28.3 billion euros compared to 39.5 billion euros in 2015, the Dutch State Treasury Agency said in a statement on Friday. The call on the money market ultimo 2015 is estimated at 46.9 billion euros while the cash deficit in 2016 is forecast to remain at 8.5 billion euros.

The treasury agency announcement followed the Dutch government’s presentation of its 2016 budget plan on Sept. 15. The economy is forecast to grow 2.4 percent, after expanding 2 percent in 2015, Finance Minister Jeroen Dijsselbloem said. That’s the fastest growth since 2007 and after the Dutch housing market collapsed during the financial crisis.

The budget deficit will narrow to 1.5 percent of gross domestic product in 2016 from 2.2 percent this year, even though revenue has been hit by lower natural-gas production over environmental concerns, according to the government. Proceeds from gas will decline to 6.05 billion euros in 2016 from 7.3 billion euros in 2015.

Proceeds related to the possible initial public offering of ABN Amro Group NV, which could take place as early as the fourth quarter of 2015, are not included in the cash balance for 2015 or 2016, the agency said.

Total borrowing requirements for 2015 were increased to 94.9 billion euros from 94.4 billion euros announced earlier, due to buybacks of Dutch State Loans. This was partly offset by a lower expected budget deficit.

Benchmark Dutch 10-year bonds dropped 12 basis points, or 0.12 percentage point, to 0.83 percent on Friday as of 1:55 p.m. London time, after the U.S. Federal Reserve kept its key rate in a range of zero to 0.25 percent on Thursday, the level where it has been since December 2008. Germany’s 10-year bunds, the euro region’s benchmark sovereign securities, dropped 11 basis points.

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