Belgium's deficit next year €1.7 billion higher than previously predicted

Belgium's deficit next year €1.7 billion higher than previously predicted
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Belgium's budget deficit next year is expected to be €1.7 billion larger than previously predicted, owing to a failure by the Federal Government to correctly assimilate the effects of a permanent reduction in the VAT energy rate into its economic models.

The revised prediction means that Belgium, with a fiscal deficit of 6.1% of annual GDP, will likely run the largest deficit of all EU Member States next year.

The revised economic predictions drew vehement criticism from the Government's opposition.

"Prime Minister Alexander De Croo has simply communicated incorrect figures in his State of the Union," N-VA Member of Parliament Sander Loones (N-VA) told De Tijd. "The Government knew perfectly well when preparing the budget how much... the lower VAT on energy would cost... It is time for the Government to take Parliament seriously, communicate honestly and finally start addressing [the deficit]. De Croo should have done better than hide behind false figures."

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Earlier this year, the Belgian Government temporarily reduced the VAT on gas and electricity bills from 21% to 6% to mitigate the effects of the global energy crisis precipitated by Russia's full-scale invasion of Ukraine. The decrease was made "permanent" early last month.

The revised figures mean that even Belgium's so-called 'structural deficit' of 3.4% exceeds the official EU fiscal limit of 3% of annual GDP.

This limit was suspended during the Covid-19 pandemic but is scheduled to come into force again in 2024.

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