July 5, 2022

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High interest rates on loans is a new setback for the Cabinet

High interest rates on loans is a new setback for the Cabinet

High interest rates setback for the treasury. The Ministry of Finance is taking about 5 billion euros into consideration during this ministerial term and will look at how to solve this in August.

In an addendum to its Spring Note, issued last Friday, the ministry says it expects to spend an additional 860 million euros in interest expenditures in 2023.

The gallows will then rise to 1.6 billion in 2024 and 2.3 billion in 2025. Interest fees will continue to rise in subsequent years as well. In 2027, a setback of 3.8 billion euros is expected.

“The expected rise in interest rates will lead to budget problems,” officials warn in documents sent to the House of Representatives with its Spring Memorandum.

It seems that the time for “free money” is over, writes m, which came via the attachment. The newspaper reported 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 increase further.

The interest was actually very low

The government has recently borrowed a lot of money because interest rates have been exceptionally low. This includes about 80 billion euros for those big funds: climate (35 billion), nitrogen (25 billion) and investments in infrastructure, research and innovation (20 billion), among others.

Interest rates are rising much faster than the Central Planning Office (CPB) forecast in March. This is partly due to inflation.