Federal Government working all weekend to negotiate budget for 2023

Federal Government working all weekend to negotiate budget for 2023
Credit: Belga

The Belgian government, led by Prime Minister Alexander De Croo, will meet again on Sunday at 13:00 to hold the first round of negotiations for the 2023 budget.

On Saturday afternoon, ministers were having bilateral talks ahead of Sunday's first negotiation. An initial meeting devoted to the budget was held on Friday morning, during which the government received the National Bank Governor, the Planning Commissioner, the Director of the Debt Agency and the Chairperson of the Monitoring Committee.

On Thursday, the Monitoring Committee delivered its report on the state of the budget, with good news: the deficit of the Belgian general government in 2023 is €6.2 billion lower than what was planned in the initial budget.

The deficit would therefore be 4.8% of gross domestic product (GDP), or €27.4 billion, instead of the 5.9% expected. At the federal level, the improved forecast amounts to €3.2 billion or 0.6% of GDP. This improvement is due to lower inflation and falling energy prices.

Some experts are arguing that, without a change in policy, the deficit could reach €41.6 billion in 2028 or 6.1% of GDP. The public debt, estimated this year at 106.4% of GDP, could represent 117.6% of GDP in 5 years.

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On the financial front, international assessments are mixed. While ratings agency Fitch downgraded Belgium's prospects eight days ago, Standard & Poor’s (S&P) on Friday affirmed Belgium’s credit rating at ‘AA/A-1+’, saying the country’s outlook remains “stable”.  Risks to public finances are mitigated by a “resilient” economy as well as a “strong” labour market and institutions.

Political pressure has been mounting in recent days among right-wing parties who are arguing for a tightening of fiscal policy. “There is no margin for new spending,” State Secretary for the Budget Alexia Bertrand (Open Vld) warned in “La Libre” on Saturday.

In the longer term, she repeated her plea for spending cuts and the implementation of structural reforms, particularly in the area of pensions. These are also under discussion but will not be included in the adjustment work for the 2023 budget.

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