OECD: Cutting public spending and boosting employment is key to balancing Belgium's budget
The Organisation for Economic Cooperation and Development (OECD) remains concerned about Belgium's budget deficit and public debt. In a report published on Monday, the economic think-tank called for a tighter fiscal policy and a higher employment rate to balance the country's finances.
Belgium has one of the highest public debts in the EU, the OECD notes, reaching 105.2 per cent of gross domestic product (GDP) in 2023. This figure is expected to rise further to 107.4 per cent in 2024 and 110 per cent in 2025, due to rising spending on pensions and healthcare.
The "resilience" of the Belgian economy and the easing of monetary policy "pave the way" for the largest efforts to be implemented immediately, according to the OECD. This will require better multi-year budgetary cooperation between the federal and regional authorities.
Tax and pension reforms
On the one hand, given the already high tax burden, Belgium should reduce public spending where there is scope for efficiency gains, the OECD says. It also points to the need for pension reform and to keep workers longer in the workforce, including "penalties" for those who stop working before the legal retirement age.
To maintain Belgium's prosperity, the employment rate also needs to be higher, the report says. At 67 per cent, Belgium's employment rate is below the OECD average. The report also advocates focusing on eliminating the unemployment trap, getting more women into work and reintegrating people with health problems.
Too much red tape
Finally, the OECD highlights the importance of SMEs. Administrative red tape adds to the workload and costs of SMEs, while it is unclear whether current support programmes are achieving their objectives. The organisation calls for such red tape to be reduced and for existing programmes to be reviewed for efficiency gains.
Belgium should also do more to promote female entrepreneurship. "In 2022, less than a quarter of SMEs were headed by a woman," the OECD points out. Targeted programmes should address this under-representation.
Belgium's budget deficit is one of the main issues in the formation of the federal government. Last week, formateur Bart De Wever asked for an extension for submitting Belgium's multi-annual budget plan to the European Commission.
© AFP PHOTO ERIC PIERMONT
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