http://online.wsj.com/article/BT-CO-20120426-704100.html
AMSTERDAM (Dow Jones)--Dutch Finance Minister Jan Kees de Jager will continue talks with three left-leaning opposition parties in an effort to reach agreement on the 2013 budget ahead of a key debate in parliament later Thursday and a European Commission deadline next week.
Talks between De Jager and the three left-leaning opposition parties, that continued until late last night, were "good," Marcel van Beusekom, spokesman for the finance minister, told Dow Jones Newswires Thursday. "They haven't reached a deal, but there's reason to continue talks," he added.
The caretaker Dutch government Wednesday started negotiations with opposition parties to try and secure backing ahead of an April 30 deadline for a revised budget package to keep the country within European Union fiscal rules.
The caretaker government, comprising Prime minister Mark Rutte's Liberal party and De Jager's Christian Democrats, is talking to the left-leaning Christian party, or Christenunie, the Liberal Democrats, or D66, and the Green party, or Groenlinks. Together these parties hold a two-seat majority in the 150-seat Dutch lower house.
Wednesday, De Jager met with representatives of all the parties in parliament, taking an inventory of proposals and possible concessions that parties were willing to make to support the budget proposals and austerity measures. The deficit-cutting package must be presented to the European Commission, the EU's executive arm, by Monday.
While talks with the three left-leaning parties will continue later Thursday, other parties might also still be involved, Van Beusekom said.
Caretaker Prime Minister Mark Rutte, whose government fell earlier this week when he failed to get support from the populist Freedom Party PVV for his budget proposals, now needs the backing of several left-leaning opposition parties to pass the austerity measures through. The deadline is tight as the EU Commission is expecting the Dutch to present a proposal by the end of this month on how the country will achieve a deficit of 3% of gross domestic product by 2013.
Fitch Ratings has threatened to strip the Dutch of their cherished triple-A credit score if they failed to take action to cut their budget deficit and stop their debt from rising. That would mean The Netherlands would lose its status as a core member of Europe's single currency bloc and would cause its borrowing costs to rise.
Fitch on Wednesday said Rutte's task in pushing through the necessary austerity measures to cut the budget deficit had got more difficult because he is now leading a caretaker government and the country is facing elections in early September.
"It is therefore possible that no such measures will be agreed until the autumn, by which point their effectiveness in reducing the current year's fiscal deficit will be limited," Fitch said.
Fitch forecast a Dutch budget deficit of 4.5% of GDP for 2012 and said there are now greater risks around the Netherlands achieving the 3% target in 2013. It reiterated Wednesday that it expects to finish a review of the Dutch credit rating by the end of June.
The Dutch government has forecast a projected deficit of 4.6% in 2013 if no cuts are made.
Rutte has proposed budget cuts of EUR14.4 billion by cutting spending on healthcare, raising the sales tax and freezing public sector wages, among other proposals. However, experts say he'll have to make concessions if he is to get backing.
Meindert Fennema, a political sciences professor at the University of Amsterdam said measures might include making it easier for employers to lay off workers and changing tax rules on mortgage interest rate payments that currently make it beneficial for householders to take out interest-only mortgages. The country has a high level of personal, mainly mortgage, debt and critics want more people to switch to repayment mortgages to reduce the burden.
Most of the opposition parties have already prepared, or are still preparing, their own proposals on the budget. Ahead of the elections, they will be reluctant to water down their proposals for fear of losing credibility with potential voters.
"There are all sorts of crisis packages [from various parties], but we'll have to try together with Parliament to come to a collective agreement and that will be incredibly difficult," Arie Slob, leader of the left-leaning Christian party, Christenunie, said Wednesday.
Slob's Christian party is one of those now key to a deal. Rutte's caretaker government is most likely to get support from the Liberal Democrats, or D66, the more progressive Green party, or Groenlinks, and Christenunie. So far, the leaders of those groups haven't formally promised their support for Rutte's budget proposals, nor is it clear whether their members will universally follow a call for endorsement of the new cuts.
The Social Democratic party, or PvdA, which is the second-largest in parliament, with 30 seats, one fewer than Mr. Rutte's VVD liberal party, claims that cutting the deficit too quickly could further harm the economy.
Rutte has consistently told Dutch lawmakers that failure to get a deal by the EU deadline would eventually result in sanctions for the country, but opposition leaders are hoping that the EU Commission will accept an interim proposal and could also look again at the deficit target.
"I'm convinced that if you come up with a solid package that addresses the core problem, that Brussels is willing to talk about the budget [deficit] target," said Jolande Sap, leader of the Green Party. "If (the Christian Democrats) and (Rutte's Liberal party) are willing to make compromises on their taboos, than I'm willing to take responsibility as part of a total package, for measures that aren't part of my proposals."
The Wall Street Journal Wednesday reported that EU officials were starting a politically sensitive discussion on how the deficit goal could be changed as it seeks to avoid driving Europe further into turmoil. Efforts by Eurozone governments to bring their deficits back within the EU target by the end of 2013 is causing economic pain and now political discontent across the region.
"At this moment there are several debates taking place, also about other countries...about the way to deal with temporary deviations of the budget deficit," Diederik Samson, leader of the social democratic party, or PvdA, said Tuesday .
--By Robin van Daalen; Dow Jones Newswires; +31 20 571 52 01; robin.vandaalen@dowjones.com
(Robert van den Oever in Amsterdam contributed to this article)
-- Dutch Finance Minister continues talks with left-leaning opposition
-- Unclear if deal can be reached, but minister sees reason to continue talks
-- Finance Minister declines to comment on exact status of talks
-- Social Democratic leader indicates room for compromise
(Updates with comments from the finance minister in 3rd and 4th paragraph and in 12th paragraph and comments from Social Democrat leader in 6th paragraph.)
(Updates with comments from the finance minister in 3rd and 4th paragraph and in 12th paragraph and comments from Social Democrat leader in 6th paragraph.)
By Robin van Daalen
Of DOW JONES NEWSWIRES
AMSTERDAM (Dow Jones)--Dutch Finance Minister Jan Kees de Jager continued talks Thursday with three left-leaning opposition parties in an effort to reach agreement on the 2013 budget ahead of a key debate in parliament later in the day and a European Commission deadline next week.
The caretaker Dutch government Wednesday started negotiations with opposition parties to try and secure backing ahead of an April 30 deadline for a revised budget package to keep the country within European Union fiscal rules.
"I've had good, constructive talks with a number of parties," De Jager told reporters late Wednesday in The Hague.
The parties haven't reached a deal yet and De Jager declined to comment on the exact status or contents of the discussions, but added there was reason to continue talks Thursday with three left-leaning opposition parties.
The government also hopes to involve the Social Democratic party, or PvdA, the largest opposition party with 30 seats in parliament. The party's leader Thursday indicated he might cooperate with the government if jobs and lower incomes are protected.
"I'm willing to make compromises, but always with the eye on people with a small salary, people with a government elderly pension and on those people that have a job that are afraid to loose it," said Diederik Samson, leader of the social democratic party, or PvdA.
The caretaker government, comprising Prime minister Mark Rutte's Liberal party and De Jager's Christian Democrats, is talking to the left-leaning Christian party, or Christenunie, the Liberal Democrats, or D66, and the Green party, or Groenlinks. Together these parties hold a two-seat majority in the 150-seat Dutch lower house.
Wednesday, De Jager met with representatives of all the parties in parliament, taking an inventory of proposals and possible concessions that parties were willing to make to support the budget proposals and austerity measures. The deficit-cutting package must be presented to the European Commission, the EU's executive arm, by Monday.
While talks with the three left-leaning parties will continue later Thursday, other parties might also still be involved.
"I have hope in that sense, that I see reason to continue talks in this composition," De Jager said.
Rutte, whose government fell earlier this week when he failed to get support from the populist Freedom Party PVV for his budget proposals, now needs the backing of several left-leaning opposition parties to pass the austerity measures through. The deadline is tight as the EU Commission is expecting the Dutch to present a proposal by the end of this month on how the country will achieve a deficit of 3% of gross domestic product by 2013.
Later Thursday Dutch parliament will hold a debate about the 2013 budget, following further talks between de Jager and the opposition parties, preceded by a letter from the caretaker cabinet about the European stability pact.
"There isn't much time. We want to hold a debate in parliament about a letter which I shall send to Brussels about the stability pact," De Jager said.
Fitch Ratings has threatened to strip the Dutch of their cherished triple-A credit score if they failed to take action to cut their budget deficit and stop their debt from rising. That would mean The Netherlands would lose its status as a core member of Europe's single currency bloc and its borrowing costs could rise.
Fitch on Wednesday said Rutte's task in pushing through the necessary austerity measures to cut the budget deficit had got more difficult because he is now leading a caretaker government and the country is facing elections in early September.
"It is therefore possible that no such measures will be agreed until the autumn, by which point their effectiveness in reducing the current year's fiscal deficit will be limited," Fitch said.
Fitch forecast a Dutch budget deficit of 4.5% of GDP for 2012 and said there are now greater risks around the Netherlands achieving the 3% target in 2013. It reiterated Wednesday that it expects to finish a review of the Dutch credit rating by the end of June.
The Dutch government has forecast a projected deficit of 4.6% in 2013 if no cuts are made.
Rutte has proposed budget cuts of EUR14.4 billion by cutting spending on healthcare, raising the sales tax and freezing public sector wages, among other proposals. However, experts say he'll have to make concessions if he is to get backing.
Meindert Fennema, a political sciences professor at the University of Amsterdam said measures might include making it easier for employers to lay off workers and changing tax rules on mortgage interest rate payments that currently make it beneficial for householders to take out interest-only mortgages. The country has a high level of personal, mainly mortgage, debt and critics want more people to switch to repayment mortgages to reduce the burden.
Most of the opposition parties have already prepared, or are still preparing, their own proposals on the budget. Ahead of the elections, they will be reluctant to water down their proposals for fear of losing credibility with potential voters.
"There are all sorts of crisis packages [from various parties], but we'll have to try together with Parliament to come to a collective agreement and that will be incredibly difficult," Arie Slob, leader of the left-leaning Christian party, Christenunie, said Wednesday.
Slob's Christian party is one of those now key to a deal. Rutte's caretaker government is most likely to get support from the Liberal Democrats, or D66, the more progressive Green party, or Groenlinks, and Christenunie. So far, the leaders of those groups haven't formally promised their support for Rutte's budget proposals, nor is it clear whether their members will universally follow a call for endorsement of the new cuts.
The Social Democratic party, or PvdA, which is the second-largest in parliament, with 30 seats, one fewer than Mr. Rutte's VVD liberal party, claims that cutting the deficit too quickly could further harm the economy.
Rutte has consistently told Dutch lawmakers that failure to get a deal by the EU deadline would eventually result in sanctions for the country, but opposition leaders are hoping that the EU Commission will accept an interim proposal and could also look again at the deficit target.
"I'm convinced that if you come up with a solid package that addresses the core problem, that Brussels is willing to talk about the budget [deficit] target," said Jolande Sap, leader of the Green Party. "If (the Christian Democrats) and (Rutte's Liberal party) are willing to make compromises on their taboos, than I'm willing to take responsibility as part of a total package, for measures that aren't part of my proposals."
The Wall Street Journal Wednesday reported that EU officials were starting a politically sensitive discussion on how the deficit goal could be changed as it seeks to avoid driving Europe further into turmoil. Efforts by Eurozone governments to bring their deficits back within the EU target by the end of 2013 is causing economic pain and now political discontent across the region.
"At this moment there are several debates taking place, also about other countries...about the way to deal with temporary deviations of the budget deficit," Diederik Samson said.
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