Dutch gov't not to cut spending despite recession forecast

Special Report:Global Financial Crisis

BRUSSELS, Dec. 9 (Chinese media) -- The Dutch government is not going to change its spending plans despite the latest forecast of recession next year, Dutch Finance Minister Wouter Bos has said.

"We must not panic. The budget is the right answer to this situation," Bos is quoted as saying by Dutch daily Het FinancieeleDagblad on Tuesday.

"Lesson one is that you don't adapt your spending plans on a daily basis," he said.

The government's 2009 budget was presented in September, before the eruption of the full-blown financial crisis. The budget was based on the prediction by the government's macro-economic think-tank Netherlands Bureau for Economic Policy Analysis (CPB), which foresaw a growth of 1.25 percent for 2009.

But the forecast was revised sharply down on Monday and the CPB predicted a 0.75 percent contraction next year. This would be the first time in 27 years the country sinks into recession.

The CPB also said that the government's budget deficit will reach 2.4 percent in 2010, due to lower tax and gas income and increased spending on social benefits.

Bos said the Netherlands is a "rich and prosperous" country and its economy is in a strong position compared with many other European countries.

"We will get through this. The Dutch economy can take a knock," the paper quoted him as saying.