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Extra ‘Groningen’ Earthquake costs at the expense of Dutch national debt

…other extra costs, such as repair and consolidation of houses, will soon be charged to the national debt to the extent that they are not paid by NAM. How high they are remains to be seen…

Printed below is an English translation of an article published today by the Dutch Financial Times, Financieele DagbladRoyal Dutch Shell and ExxonMobil each own a 50% share in NAM, the company responsible for the earthquake blighted Groningen Gas Field and consequential potential bill for untold billions in damages to effected residences.

Extra ‘Groningen’ costs at the expense of national debt

From our correspondent • Economy & Politics

The Spring Memorandum has yet to be ratified in the Cabinet, but is in broad terms ready, as sources in The Hague confirm. Education will receive €60 million on balance this year. A setback of €200 million, partly due to higher student numbers, could only be covered for €140 million within its own budget.

At the instigation of VVD and CDA, the Ministry of Justice also receives such an amount, but that is only from 2019, as agreed. As in previous years, the extra expenses can be easily absorbed from the windfalls that occur in social security and healthcare.

On balance, Minister of Finance Wopke Hoekstra is still heading for a comfortable budget surplus of almost 1% of GDP for this year, as will be apparent from his interim balance sheet. This is well above the balance of 0.5% that was foreseen in the calculation of the coalition agreement.

Hoekstra (CDA) did not want to say anything on Wednesday after the Council of Ministers, but the coalition also seems to have agreed relatively easily on the cover for any additional costs arising from gas extraction in Groningen, and the approaching end of it.

If there are fewer gas revenues flowing to the State – which is probably not the case for this year – they must be accommodated within the existing expenditure framework as already agreed in the coalition agreement. For this year, €2 billion in gas revenues is still in the budget, by no means all from Groningen. Gas production will also only go to zero in 2030, making the coverage problem clear.

But other extra costs, such as repair and consolidation of houses, will soon be charged to the national debt to the extent that they are not paid by NAM. How high they are remains to be seen.

This year, the national debt, according to the latest findings of the Central Planning Board, is already significantly lower at 52.1% of GDP than was foreseen in the coalition agreement (53.5%).

SOURCE

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