The government will meet on Sunday at 1 p.m. for a first round of negotiations for the 2023 budget control around Prime Minister Alexander De Croo. Saturday followingnoon will be devoted to bilateral talks.
A first meeting was devoted to budget Friday morning, during which the government received in select committee the Governor of the National Bank, the Planning Commissioner, the Director of the Debt Agency and the Chairman of the Monitoring Committee.
On Thursday, the Monitoring Committee delivered its report on the state of the budget, with good news: the deficit of all the Belgian public authorities is lower in 2023 by 6.2 billion euros compared to what was forecast in the initial budget. The budget deficit would thus amount to 4.8% of Gross Domestic Product (GDP), or 27.4 billion euros, instead of the expected 5.9%. For the level federal, the improvement compared to forecasts amounts to 3.2 billion euros or 0.6% of GDP. This improvement explained by lower inflation and lower energy prices.
However, the outlook remains worrying. With unchanged policy, the deficit of Belgian entities might reach 41.6 billion euros in 2028 or 6.1% of GDP. Public debt, estimated this year at 106.4% of GDP, might represent 117.6% of GDP in 5 years.
On the financial level, international assessments are mixed. While the Fitch rating agency downgraded Belgium’s rating eight days ago, Standard & Poor’s (S&P) on the other hand confirmed Belgium’s credit rating on Friday at ‘AA/A-1+’, estimating that the outlook remain “stable” as risks to public finances are mitigated by a “resilient” economy and a “strong” labor market and institutions.
Political pressure intensifies the last few days right for a budget twist. “There is no not margins for new expenditure”, warned Saturday in “La Libre” the Secretary of State for the Budget, Alexia Bertrand (Open Vld). And, in the longer term, to repeat its plea in favor of the reduction of expenditure and the implementation of structural reforms, in particular in the area of pensions. These are also under discussion but will not be attached to the 2023 budget adjustment work.
