The International Monetary Fund, the IMF, has conducted its annual examination of the health of Belgian public finances. The IMF says the budget deficit shouldn’t be allowed to grow next year and should preferably be cut. It encourages Belgium to make savings of over 4 billion euros next and in following years.
Belgium is in poor shape compared to other Eurozone countries. The budget deficit stands at 5.9% of national output, while the national debt equals 109.4% of national output.
The IMF calculated that savings worth 0.8% of national output will be required next year and in following years in order to stop the budget deficit from growing and to stabilise the national debt. Saving 4 billion euros next year will have an important impact on inflation, confidence, the country’s budgetary room to manoeuvre and its vulnerabilities the IMF argues.
The Fund claims government expenditure is too high and efficiency savings with regard to wage costs, social benefits and the cost of the aging of the population are possible. It insists taxes need to be cut and the labour market requires reform including limiting unemployment benefit in time. Energy support measures need to be targeted on vulnerable groups.
The IMF sees benefits to Belgium’s system of automatic wage indexations, but favours reform of the health index to which the wage rises are pegged. It suggests products that are subject to large price fluctuations could be removed from the basket. Experts say this is a reference to energy prices.