The Court of Audit is concerned about the increasing debt of Brussels Region and its sustainability, amid rising interest rates, and has declined to certify its 2022 general accounts.
By the end of 2022, the region’s debt had ballooned to around €11.5 billion, marking a 20% year-on-year increase and a 108% jump since 2028.
The debt is now equivalent to twice the region’s annual revenue, the Court of Audit noted in a report. It attributed the debt surge to the regional government’s decision to finance continuous budget deficits through borrowing.
Interest payments up by €14 million
This rise in debt led to a €14 million increase in interest expenses, which totalled slightly above €145 million at the end of 2022. Given the current increase in interest rates, this could pose a serious problem for the region, said the Court.
“The future sustainability of its debt, as expressed by a public authority’s ability to repay its loans and thus solvency, could be threatened by the interest rate increase that started in 2022 and continues in 2023,” the Court said.
It could also be threatened by “the lack of control of the budget balance, due to an insufficient revenue growth compared to expenses,” the Court observed in its 28th assessment report on the Capital Region.
Auditors reserve judgement on general accounts
The report also noted that 2022 ended with a deficit of €1.5 billion, whereas the initial budget had predicted a €2-billion overspend.
Due to “uncertainties” surrounding tax revenues and debts recorded in the general services accounts of the Brussels Region, the Court of Audit abstained from expressing an opinion on the regional entity’s 2022 general accounts.
Responding to the report on Tuesday, Brussels’ Finance Minister Sven Gatz (Open VLD), stated that although the Court did not certify Brussels’ accounts, it recognised that “significant efforts have been made.”
As proof, he noted that the Court did not reject Brussels’ accounts as it did for Wallonia, but rather abstained.
Opposition claims 'wasteful' financial management
“This means that it does not wish to give an opinion because the internal processes are not quite ready yet,” Gatz said, adding that regional administrations were currently adjusting their accounting methods to meet the Auditors’ expectations.
However, the opposition N-VA saw the situation differently.
“Never has a minister managed Brussels taxpayers’ money in such a wasteful and opaque way,” Nieuwe Vlaamse Alliantie (N-VA) Group leader Cieltje Van Achter said in a statement.
“The Budget Minister seems to have given up doing his job properly, as evidenced by the fact that for the first time in 28 years, he will not submit a budget adjustment for 2023 to Parliament and the Court of Audit,” Van Achter commented.
