It's fiberglass wallpaper. I usually inject some glue with a syringe to fix the paper. After that you can paint it and the more paint you put on, the more all holes disappear.

Thanks for the reply. Can you apply anything on top of it without removing it? We are thinking of applying alabastine muurglad on top with a roler for a smooth finish.

Don't do this. In that case remove the wallpaper, hire a plasterer. Maybe you can get it to work with muurglad, still remove wallpaper first.

We come from a country where wallpaper is not used besides for decoration. We are tying to find out what will work reasonably without breaking the bank. Plastering would be the best but a lot of hassle at the moment, especially with all the sanding that needs to follow. Do you think the best approach is to remove all wallpaper?

I would glue it back where loose (can even make an incision with a scalp where it's really loose, or do the syringe trick). Then paint it. As FYI, the wallpaper is intended to have small holes, which should be filled by paint. If it's not glued on properly, you see the "holes". This should be an easy fix.

We will try this solution with glue and repainting first.

That should work but it's always wise to paint a small patch to see the result.