Belgian budget deficit revised down to 4.2 per cent in 2023
The budget deficit of Belgium's governments was revised slightly downwards by the National Bank on Friday. The country faced a deficit of 4.2 per cent of GDP instead of 4.4 per cent in 2023.
The new figure is partly the result of lower-than-expected expenditure in the wake of the energy crisis, as well as a number of methodological adjustments. These adjustments were necessary "to improve the quality, international comparability and relevance of the statistics", the National Bank said.
Belgium's budget deficit is a key issue in the ongoing negotiations to form a new federal government in the country. Budget cuts of more than 28 billion euros are looming and will have to be accompanied by major socio-economic reforms if the new government is to avoid a strict European adjustment path.
New EU fiscal rules
The EU reformed its fiscal rules last year, giving countries that overshoot their debt limits four to seven years to get back into line before facing sanctions. In order to comply, EU countries have to keep their budget deficits within a limit of 3 per cent of GDP and their public debt at 60 per cent of GDP.
Even after the revision, Belgium's 2023 budget deficit is up to 0.6 percentage points higher than the year before
Even after the revision, Belgium's 2023 budget deficit is up to 0.6 percentage points higher than the year before. The difference can be explained by a strong policy-driven increase in public spending, a structural increase in the cost of an ageing population and rising interest rates. The automatic indexation of benefits and salaries of public employees also increased spending.
As a result of the widening budget deficit, government debt rose to 103.1 per cent of GDP. The previous estimate in April was 105.2 per cent of GDP. There are big differences between the various Belgian governments, however. The debt of the Walloon and Brussels regions is more than double their revenues in 2023, while Flanders and the French Community have a debt-to-revenue ratio of 53 and 50 per cent respectively.
© PHOTO KENZO TRIBOUILLARD / AFP
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