The measures taken by the federal government to protect the economy from the effects of the coronavirus crisis will cost the country €10.2 billion, or 2.3% of GDP, according to finance minister Alexander De Croo.
De Croo (Open VLD) was reporting to the finance committee of the federal parliament on the proposed stability programme drawn up by the government, which now has to be submitted for approval to the EU Commission.
Of that total, €6.4 billion has already been committed. That includes €3.6 billion for the widespread application of the system of temporary unemployment, where the government takes on the payment of 70% of the wages of workers forced to stop work when their place of employment was closed.
“Clearly, temporary unemployment does not come free,” the minister told committee members.
Another €3.8 billion concerns spending by regional and local authorities in areas that are part of their devolved responsibilities, including education and the compensation paid to businesses like shops, bars and restaurants that were forced to close.
De Croo stressed that the sum concerns one-time expenses, although in some cases the spending could be extended if the recovery of the economy depended on it.
“It is a lot of money, but in principle these are one-time measures, unless we come out of the corona crisis badly, and then they risk becoming structural,” he said.
“That is why it is important that companies and shops can restart in early May. And that hospital admissions are falling. For the time being, things are going in the right direction.”
And the spending is not over. The government is currently considering a rescue package for businesses, as well as a proposal from socialists and greens to reduce the withholding tax on those on temporary unemployment.
The government has already earmarked €50 billion for bridging credits for businesses having cash flow problems, as well as deferred payment of tax and loans. In theory, however, those measures should be budget-neutral, unless borrowers default, in which case the brunt of the burden falls on the lending banks rather than the government.