The International Monetary Fund (IMF) has released its annual assessment of Belgium’s economy, highlighting its resilience but warning about significant deficits and rising public debt.
Belgium’s current policies have received praise for ongoing reforms in taxation, pensions, labour market, and healthcare; however, the IMF emphasised the need for decisive action to address challenges like global trade tariffs, ecological transition, and increasing defence spending.
The IMF predicts that public debt will continue to rise until 2030 despite these reforms, driven by factors such as population ageing, which is weakening growth forecasts and increasing costs. It raises concerns that the federal government’s optimism in achieving a deficit of 3% of GDP by 2029 might lead to market risks, citing international examples of sudden confidence loss.
The report urges further efficiency improvements in pensions, healthcare, and education spending. It also calls for enhanced cooperation between federal and regional entities for better planning and coordination of public investments.
On taxation, the IMF recommends shifting part of the tax burden from labour to capital, suggesting that exemptions in the current capital gains tax could be reduced to generate more revenue and equity. Jean-François Dauphin, the IMF’s mission chief, has emphasised the need to scrutinise existing tax incentives, noting they amounted to 6.1% of GDP in 2021—equivalent to €38 billion by 2025.
Dauphin suggests reviewing whether these tax measures still align with public policy priorities, questioning their cost-effectiveness. Reforming inefficient exemptions and incentives could lead to significant savings.
Regarding employment, the IMF encourages greater investment in training and calls for efforts to reduce fragmentation in the labour market between Belgium’s regions.
The report also highlights the importance of deeper collaboration with EU countries in areas such as the single market, financial integration, and energy market harmonisation.
While acknowledging the potential challenges and public impact of these reforms, Dauphin warns that inaction might lead to harsher economic consequences for the Belgian population.
The IMF’s full report, summarised during a presentation at the National Bank of Belgium, will be published in mid-February.
