Dutch right-wing government cuts development aid as deficit balloons

By Bart H. Meijer

AMSTERDAM (Reuters) - The Netherlands' right-wing government said on Tuesday it would cut development aid by more than two thirds over the next three years amid an expected deterioration in state finances.

The move follows the election victory late last year of nationalist far-right leader Geert Wilders, who after months of tense negotiations formed a government with three other right-wing parties.

That coalition, which had already said it would drastically cut the aid budget, is led by Prime Minister Dick Schoof, an unelected career civil servant who took the top job as other parties were unwilling to accept Wilders as government leader.

Its first budget, unveiled on Tuesday, showed that the government deficit would rise to 2.8% of gross domestic product (GDP) next year, up from 2.2% this year and close to the maximum level of 3% agreed among EU member states.

The government said it aims to cut the development aid budget by 300 million euros ($330 million) in 2025 and by 500 million euros in 2026. The budget cuts will total 2.4 billion by 2027. The aid budget was about 3.5 billion euros this year.

The Netherlands has traditionally been among major donors of development aid, usually aiming to spend the internationally agreed level of 0.7% of GDP.

However, the government deficit has risen quickly in recent years due to lavish spending to compensate for the COVID-19 pandemic and soaring energy prices.

The new government has vowed to protect consumers' spending power and next year will lower taxes on the use of gas and scale down tax rates for lower incomes.

Earlier this month, it said it would hike spending on defence by more than 10% next year and would spend more on border controls as part of a broader clampdown on asylum migration.

($1 = 0.8988 euros)

(Reporting by Bart Meijer; Editing by Gareth Jones)