Federal government offers €1.2 billion loan to Wallonia for flood repairs

Federal government offers €1.2 billion loan to Wallonia for flood repairs
The money will help rebuild large constructions, including bridges. Credit: Belga

The federal government has announced it will be lending the Walloon government €1.2 billion to help with the reconstruction after the deadly floods that ravaged the region in July.

As part of his promise not to abandon the flood victims, Prime Minister Alexander De Croo confirmed the loan, which is expected to go towards large infrastructure works – such as the reconstruction of bridges and schools.

“The federal government analysed the propositions made by the Walloon government to see what would be possible, and yesterday, as a result, the Core cabinet of ministers decided to give almost €1.2 billion in loans,” he said during a press conference on Thursday.

This announcement came in response to a letter that was sent by the Walloon government to the federal government two weeks ago, stressing the budgetary impact of the floods and putting forward several concrete measures that could be taken to support the region.

The cost of the flood damage so far has been estimated at around €3 billion, which equates to around one-fifth of the region’s entire budget, which is why the Walloon government asked the federal government to step in.

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“The measures that we are announcing are an important way to help the people who were affected to repair the damage as quickly as possible so they can return to living a normal life,” De Croo said.

The loan will be granted at an interest rate “in line with the market rate,” and will have to be paid back between 2025 and 2035.

In addition, the federal government decided to introduce a reduced VAT rate of 6% for private owners in the worst areas until the end of 2022.

To support both employees and businesses in the area, employers can also draw on a tax reduction of 25% on the wages of new employees they hire.

Lessons to be learned

Aside from announcing the measures that will be taken to deal with the aftermath of these floods, De Croo stressed that lessons must be learned from the event to prepare for the future.

“It is clear that the impact of climate change can be seen in the weather conditions, also in our country, and that we are going to face more of that in the future than we did before, with heavy floods but also with long periods of drought,” he said.

De Croo stressed that the government will start preparing for this today, adding that he sent a letter to all Minister Presidents proposing an inter-federal solidarity mechanism that can be put in place in case of future exceptional disasters, similar to the system that was previously mentioned by State Secretary for Economic Recovery Thomas Dermine.

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