THE HAGUE, Netherlands — A polarized Dutch Parliament will debate Tuesday how to get the country's economy back on track and try to set an election date after the collapse of the country's conservative government.
Prime Minister Mark Rutte's 18-month old conservative coalition resigned Monday after it failed to agree on cutting its own budget deficit to meet the EU limits it had itself demanded of other countries.
The immediate question facing party leaders will be what budget statement they can allow Rutte — now caretaker leader — to deliver to Brussels by April 30, a deadline for submitting a preliminary 2013 budget. The note must explain how the Netherlands plans to bring its projected 4.6 percent 2012 budget deficit below the 3 percent European limit.
One of only four eurozone nations with a coveted AAA credit rating, the government is keen to reassure markets it is doing all it can to rein in spending and meet the EU limit. Rating agencies have warned they are closely watching events in The Hague.
A credit downgrade would drive up borrowing costs for the government, further compounding the economic malaise in a country already mired in recession.
So far, financial markets appear to be giving the Netherlands the benefit of the doubt: early Tuesday the government was able to auction around €2 billion ($2.6 billion) in bonds at highly reasonable rates, including €1 billion ($1.3 billion) worth of 2 year bonds at a yield of 0.523 percent, according to treasury spokesman Ben Feiertag — lower than before the political crisis began.
As head of a caretaker administration, Rutte will likely have to agree some cuts with leftist parties he snubbed during his two years as prime minister.
Key leftist opposition parties say they are willing to discuss more austerity, but have repeatedly stressed that spending cuts and tax rises could do more harm than good to the ailing Dutch economy.
Finance Minister Jan Kees de Jager said Monday reaching the 3 percent limit is "feasible," but the ball is now in Parliament's court and he urged lawmakers to work with the caretaker government.Comment on this story
"This is important not only because Europe and Brussels is asking for it," De Jager said. "It is important for the Netherlands."
Parliament must also agree on a date for national elections, perhaps as early as June.
Getting the budget back on track before and after elections will require cooperation among political leaders who on Monday could not even agree on a poll date. A narrow majority favors a June 27 elections, while other parties say that is too soon and would rather wait until September — after the Parliament's summer recess.
It is ultimately up to the caretaker government to decide on a date. According to the country's electoral commission, a deadline for parties to submit their lists of candidates must be set around 40 days after parliament is officially dissolved and elections are held 43 days after the registration deadline.