Statement by the IMF Staff Representative on Denmark, June 16, 2017

2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Denmark

Abstract

2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Denmark

This statement provides information that has become available since the issuance of the Staff Report. The thrust of the staff appraisal remains unchanged.

1. Preliminary data indicate that GDP increased by 0.6 percent (q/q) in the first quarter of 2017, somewhat above the staff projection of 0.4 percent. Growth was driven by significant stockbuilding and the new data do not materially change the outlook.

2. The current account for 2016 was revised down to 163,803 DKK million from 168,468 DKK million, reducing the surplus from 8.1 to 7.9 percent of GDP, mostly on account of higher services imports.

3. The government has announced a new “2025 plan.” In contrast to last year’s plan, it does not provide detailed proposals but rather sets out broad policy objectives for the coming years. Specific measures remain to be negotiated, starting with the 2018 budget discussions in the autumn. The new plan continues to envisage some easing of the fiscal consolidation path, reaching structural balance by 2025. Other broad objectives maintained from the previous plan include reducing the tax burden, strengthening work incentives, and reforming education. The plan does not include staff-recommended further reforms of pensions and mortgage interest deductibility, or the incremental Allowance for Corporate Equity.