Denmark Backtracks on Budget Goals Citing Refugee Crisis Costs

Denmark’s government is signaling it may need to revise its budget targets to cover the cost of absorbing thousands of refugees.

Finance Minister Claus Hjort Frederiksen told Bloomberg his department is “still trying to assess the costs.” But “it’s certainly the case” that the refugee inflow will push public spending higher.”

There’s now speculation the government will need to issue more debt in order to cope with the development, which includes a deteriorating economic outlook. The debt office’s issuance target may grow by as much as 30 billion kroner ($4.3 billion) in the spring or summer, according to Michael Liebak, chief analyst at Nykredit.

Frederiksen has already backtracked on an earlier pledge to start talks on tax cuts this spring, a move that prompted one government support party to threaten to withdraw its backing.

Denmark may have received as many as 21,000 immigrants in 2015, Prime Minister Lars Loekke Rasmussen says. That compares with just under 15,000 in 2014.

"We still don’t know how big the second wave of refugees will be in terms of children and other relatives arriving on family reunifications," Frederiksen said.

Refugees whose applications for asylum are accepted by the Danish government get access to job training, free language courses and an "integration" check of about $860 a month to cover their basic living expenses.

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