Brussels, 09/01/2012 (Agence Europe) - The European Commission positively received the declarations made by the Belgian government to tighten its belt in 2012 and bring its budget deficit to below the national GDP ceiling of 3%. On Monday 9 January, the spokesman for the commissioner for euro affairs Olli Rehn declared that the decision to establish a budgetary reserve on top of the measures already included in the 2012 budget represented “important news that we will take into account in our evaluation”.
The government of Prime Minister Elio Di Rupo is moving more in the direction of a freeze on spending rather than increasing tax revenues. The Belgian minister in charge of the budget, Olivier Chastel, declared on 7 January on the RTL-TVI channel that “the Commission gave us a choice: either new immediate measures over a weekend for 1.2 billion, which we refused to do, or introduce a freeze in different spending areas, over a period of months. This is the option we chose”. On Monday, the minister in charge of finances, Steven Vanackere, repeated the same message on the RTBF channel and indicated that they needed to be “very prudent with the revenue instrument… and particularly attempt to see whether further progress is possible in the spending area”.
Belgium has made a commitment to bring its public deficit down to 2.8% of GDP by implementing measures included in its 2012 budget. In the spending field, this will particularly involve further reductions in unemployment benefits, making the public sector more lean, and introducing pensions reform but without affecting the indexed wages system (see EUROPE 10504). The Commission considers that the figures put forward by the Belgian authorities with regard to its economic growth forecasts are too optimistic. According to the Commission, the Belgian public deficit is expected to reach 3.25%. This explains the Commission's request to the Belgian authorities to adopt additional budgetary measures.
Five member states, including three in the eurozone - Belgium, Cyprus and Malta - together with Hungary and Poland, have made commitments to get back to below the 3% threshold in 2012. Rehn's spokesman indicated that the Commission would make its conclusions over the next few days as part of the “corrective” framework of the excessive deficit procedure. According to the revised stability and growth pact, countries that are subject to a procedure could be subject to financial penalties. (MB/transl.fl)