Following its success in 2023, there are more calls to issue another one-year state bond with a reduced withholding tax, but it has sparked opposition within the Federal Government.
On Sunday, Belgium's Finance Minister Vincent Van Peteghem (CD&V) responded sharply to State Secretary for the Budget Alexia Bertrand's (Open VLD) opposition to another one-year state bond with a reduced withholding tax.
Van Peteghem with the initial State Bonds aimed to offer an alternative to the traditional savings account, which would lead banks to increase their savings rates. However, just hours after the announcement, Bertrand – who was to give her final approval of that reduced rate by Monday 19 February, when a decision on the applicable rate is expected – openly opposed the issuance of this type of state bond.
He responded to this opinion on VTM Nieuws saying that it would "actually be irresponsible not to issue that state bond today". He accuses the Liberals (Open VLD), as well as the right-wing nationalist opposition party N-VA, of being unworldly. They argued that people can go to banks today and get an interest rate of 3% or negotiate the interest rate.
Van Peteghem stressed that this may be true for big business, but for the hardworking citizen, the "interest rate is still far too low".
'Personal fight'
Last week, the Debt Agency announced that Belgium will again issue state bonds, including one with a three-year term and the usual withholding tax rate of 30% and one with a one-year term at the same reduced withholding tax rate of 15%.
Van Peteghem has been advocating that advantageous rate for some time following last year's success. That initiative was the most successful in Belgian history and saw a total of €21.896 billion being raised.
Bertrand argued that it is not appropriate from a budgetary perspective to additionally support the more expensive one-year interest rates. She did note that the one-year state bond can be issued at the normal rate of 30%.
"But the experts from the National Bank, the Agency and the Finance Inspectorate as well as all the economists all say it would be a good thing for the budget and savers," Van Peteghem said on VTM. He also expressed anger at Bertrand's attacks against the Debt Agency. "I cannot stand for the fact that people start ridiculing that institute."
Banks have also opposed the issue – record amounts were withdrawn from savings accounts as a result of the last issue – but Van Peteghem refuted that the operation would shake up banks as there will be a €6 billion cap on what can be raised. "This cannot have an impact on financial stability because it only concerns 3% of all savings."
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Subscribing to the state bonds will be possible from Thursday 22 February until Friday 1 March or until the maximum amount of €6 billion is raised. The issue's gross return will be announced on Tuesday. Van Peteghem says it would be "logical" for savers to have clarity and certainty on the terms of the issue by then.
Bertrand rebuked Van Peteghem for turning a "rather technical debate (...) into a personal fight. That is not the way I do politics." She added that the debate should be carried on in the Council of Ministers, "where I will explain to you all the figures, details and calculations." It seems unlikely her advice will be overruled here as Bertrand herself is part of the Council and can count on the support of Open VLD colleagues.
