Rising interest rates are a setback for the Treasury. The Ministry of Finance is taking about 5 billion euros into account during this cabinet term and will look at how this should be solved in August.
In an appendix to the Spring Memorandum, which came out last Friday, the ministry says it expects to spend 860 million euros more in interest expenditure in 2023.
The noose will then rise further to 1.6 billion in 2024 and 2.3 billion in 2025. And interest charges will continue to rise in subsequent years. In 2027, a setback of 3.8 billion euros is expected.
“The expected higher interest rates will lead to budgetary problems”, officials warn in documents that were sent to the House of Representatives with the Spring Memorandum.
The time of ‘free money’ seems to be over, writes the AD, which came across the attachment. The newspaper states that in August, in the run-up to Budget Day, the cabinet will have to decide to cut investments, cut spending or allow the budget deficit to rise further.
Interest rates very low
The government has recently borrowed a lot of money because interest rates were exceptionally low. This includes around 80 billion euros for those large funds: for climate (35 billion), nitrogen (25 billion) and investments in infrastructure, research and innovation (20 billion), among other things.
In the Spring Memorandum it has been decided that more than EUR 2 billion of this loan amount will be spent on other things.
Interest rates are rising much faster than the Central Planning Bureau (CPB) predicted in March. This is partly due to inflation.
–
