Federal budget negotiations promises headaches

The federal government has started its talks regarding the budget. This does not promise to be an easy job. The budget is in the red and the crisis seems far from over.

The deficit for this year is estimated at €19.6 billion. The monitoring committee published in its report that if the federal government does not adjust its policies, the federal deficit will reach 23.14 billion euros or 4 per cent of gross domestic product next year.

Skyrocketing inflation and the extension of a package of energy measures until March next year are pushing the budget even deeper into the red than expected. The reduction in the VAT rate on gas and electricity, the extension of the target group for the social tariff and the reduction in excise duty on petrol and diesel add up to €1.48 billion. The additional cost of inflation-linked rising benefits and civil servants' wages comes to €1.7 billion.

Prime Minister De Croo and his State Secretary for the Budget Eva De Bleeker want to subtract about four billion from that. In this way, they want to reduce the deficit to just over three per cent of GDP by the end of the coalition period.

The surplus profit contribution will make up some of the cost. Federal Energy Minister Tinne Van der Straeten wants to skim 4.7 billion euros in excess profits with her new proposal for a crisis contribution from energy producers. The crisis contribution from the energy and petroleum sector would still amount to EUR 1.8 billion for this year. Next year, Van der Straeten is targeting €2.9 billion. For electricity companies, all revenues above the 130 euros per megawatt-hour limit would be taxed at 100 per cent. For oil companies, the proposal provides for a tax of 1.5 cents per litre sold, which the companies are not allowed to pass on in tariffs.

According to the French-speaking Socialists, De Croo put a proposal on the table to fill in the savings. It involves cutting time credit, parental leave and career breaks for civil servants. The proposal includes several options: including cutting benefits by five to 10 per cent, shortening the number of months you can take time credit or lowering the age of children for whom you can take thematic leave. Green and PS, at least, do not agree. After day two of the budget negotiations, the proposal was already taken off the table.

The De Croo government is facing a difficult week. Money is being asked for on all sides and at the same time savings have to be made. The railway unions are also striking tomorrow for more resources and more staff following the budget talks. ​
An agreement should more or less be reached by 11 October, when the annual State of the Union is scheduled. ​ Prime Minister Alexander De Croo will then open the new political year in parliament and will present the broad outlines of the budget.


© BELGA PHOTO NICOLAS MAETERLINCK - Prime Minister Alexander De Croo pictured during a plenary session of the Chamber at the Federal Parliament in Brussels, Thursday 29 September 2022.

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