Dutch deficit within euro pact rule

The European Commission does not think the Netherlands 2004 budget deficit will breach an EU ceiling of three per cent of GDP.

"The budget and our forecast are our latest figures that we have on the Netherlands which do not show a figure higher than three per cent", a Brussels spokesman told journalists.

"Our forecast on November 29 had a deficit of above two per cent and the Netherlands was highlighted as one of the countries where there is a deterioration in public finances, but not a country that is expected to have a deficit of above three per cent."

The Brussels prediction followed a forecast by the Central Planning Bureau, a government think tank, which predicted the Netherland's deficit would rise to three per cent of GDP this year and 3.25 per cent next year.

EU fiscal rules laid out in the EU Stability and Growth Pact underpinning the euro stipulate budget deficits must be kept below three per cent of GDP.

But the pact is already under review after member states refused to impose its sanctions on France and Germany, whose deficits will not be less than three per cent until 2005 at the earliest.

Gerrit Zalm, the Netherlands' finance minister has repeatedly called for Europe's two largest economies to be brought to task for jeopardising the pact.

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