For the year 2023, Belgium needs to make a savings effort of 0.8% of gross domestic product (GDP) – which comes to around €4 billion – to keep its overall budget deficit under control, the International Monetary Fund (IMF) said after its annual review of the Belgian economy.
During successive Covid-19 and energy crises, governments have reached deep into their pockets to support families and businesses, as well as increased spending on defence and the ageing population, among other things.
All of this will make the budget deficit even higher in 2023, with IMF mission chief Mark Horton stressing that Belgium's deficit is "well above pre-pandemic levels" and also well above a level that would stabilise the debt. This makes the country very vulnerable to new shocks as high debt levels limit fiscal space, which is why Belgium "needs to tighten its belt" immediately, according to the IMF team.
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"The overall budget deficit should not increase in 2023 and should ideally be reduced," Horton said. "This requires an adjustment of about 0.8% of GDP or more next year and an annual adjustment of similar size or more thereafter, until a deficit that stabilises the debt."
In particular, there are "efficiency gains" to be made in public spending, said Horton, also calling for additional reforms in taxation, pensions and the labour market.
The IMF has been a longstanding and controversial advocate for neoliberal economic policies, which centre keeping public spending low while opening the door for the privatisation of public services.