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The Belgian recovery lacks nerves

As the public deficit reaches an abysmal level, the kingdom seems unable to fix the post-covid reform package.

As the public deficit reaches an abysmal level, the kingdom seems unable to fix the post-covid reform package.

From our correspondent, Max Helleff (Brussels) – It is no longer an abyss but an abyss. Belgium’s public deficit for 2020 is estimated at 45 billion euros. The heaviest of the post-war period with a hole of 10.04% of the gross domestic product. Previously, it reached 1.95% of GDP, or 9.3 billion.

The reasons for this tumble are of course to be found in the coronavirus crisis. 21 billion euros have been released for the sole support of the various sectors of activity put on hiatus and workers at risk. Conversely, tax revenues have collapsed. In total, estimates the Ministry of the Budget, the crisis will have had an impact of 35.6 billion.

Pierre Wunsch, Governor of the National Bank of Belgium, insists: “I am not arguing for a return to fiscal consolidation until the recovery is strong enough. It wouldn’t make sense. But as soon as the situation returns to normal, Belgium will have to set a budgetary objective to guarantee the sustainability of public finances ”. Without being able to count on new taxes, “the bulk of the effort will have to come from the expenditure side.” Problem: Belgium continues to tighten its belt since the economic and financial crisis of 2008. The Wallonia-Brussels Federation, the level of power which organizes French-speaking education, is thus considered to be virtually bankrupt.

Now is the time to be creative. However, Belgium has just handed over to Europe the “structural reforms” part of its recovery and resilience plan. This is the condition sine qua non to access the 5.9 billion euros promised to it by 2026.

A problem of choice

And there, the disappointment is up to the stakes. For The evening, the inventory of structural reforms drawn up by the various governments of the country “demonstrates an impressive mastery of the art of… copy and paste. Essentially, each entity sets out its general policy statement, as if it perfectly meets European demands. “

The Commission expected reforms in public finances, health care, competitiveness and mobility. And of course in terms of the transition to a low carbon economy. Belgium is responding with a vast catalog of intentions ranging from the arrival of 5G to railways, including the circular economy. A priori, these lists are compatible. The problem lies rather in the inability of the different levels of Belgian power to make precise choices. Aggravating circumstance: most of the projects issued date back to the pre-covid period, “while the recovery plan requested by Europe is supposed to respond to the coronavirus crisis and the weaknesses it has highlighted”.

173 reforms

Several reasons can explain this: the health crisis is time consuming, most parties are in power and refuse to draw a line on their own program, the executives lack leadership, etc.

In all, the kingdom has listed 173 reforms, three times what Europe is asking for. The latter also seems doubtful in the face of certain projects (which are not) – such as the implementation of this or that European directive – or are squaring the circle such as the very controversial automobile taxation in Brussels, including Flanders and Wallonia do not want.

Belgium must submit its new proposal to the Commission before midnight on April 30.


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