Federal budget deficit estimated to rise to 39 bn euros in 2029
If policy were to remain unchanged, the federal budget deficit would rise to more than 39 billion euros in 2029, which is 1.7 billion euros more than estimated in July. That shows a new report by the monitoring committee, the group of senior civil servants that monitors the budget. The bad news only makes the De Wever government's budget exercise more difficult.
After Flemish minister-president Matthias Diependaele delivered his September Declaration on Monday afternoon, it will soon be prime minister Bart De Wever's turn. He is expected in the Chamber on 14 October to deliver his state of the union address, which should include a package of measures to curb the growing federal budget deficit.
A new report by the monitoring committee shows that intervention is necessary. This report is the starting point for discussions in the federal government on the drafting of next year's budget.
The new figures show that, if policy were to remain unchanged, the federal deficit would rise to 39.1 billion euros, or 5.5 per cent of gross domestic product (GDP), by 2029. That is 1.7 billion euros more than the estimate presented by the monitoring committee in July. In 2030, the deficit would even rise to 42.5 billion euros. Next year, the federal budget will end up with a deficit of 26.2 billion, slightly less than the previous figure.
The worse result in 2029 compared to the July report is due to an increase in interest rates on Belgium's debt, amounting to approximately 1.4 billion euros. However, the decline in revenue is also increasing by 700 million euros, and the federal government will have to transfer an additional half a billion euros to the regions.
The government cites as mitigating circumstances the fact that the monitoring committee barely takes into account payback effects. It also refers to additional defence spending and the uncertain geopolitical situation, which is weighing on economic growth.
The figures contrast with the official ambition to reduce the federal deficit to 3 per cent of GDP by 2029. With these figures, this would mean that a gap of 18 billion euros would have to be closed by 2029. That ambition has however been expressed less forcefully recently. De Wever said last week in the Chamber: “The closer we can get to that, the better.”
In the coming weeks, the key question will be how exactly the government will reduce the deficit, after already implementing major reforms in areas such as pensions and the labour market.
Belgian budget minister Vincent Van Peteghem and prime minister Bart De Wever © BELGA PHOTO ERIC LALMAND
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