Five days after the federal, regional and European Elections, the Federal Planning Bureau has published a public debt forecast. Although the forecast is less pessimistic than a forecast published by the National Bank of Belgium just ahead of the elections, it still predict a sharp rise in public debt in the coming years.
Federal Planning Bureau less pessimistic about budget deficit than National Bank
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If policies were to remain unchanged, the National Bank of Belgium forecasts a budget deficit of 4.8% this year, increasing to 5.3% in 2025 and 5.3% in 2026. The Federal Planning Bureau is slightly less pessimistic. It forecasts a budget deficit of 4.5% this year, rising to 4.9% in 2025 and 5.3% in 2026. By 2029 the deficit will rise to 5.8% if policies remain unchanged. According to EU rules Eurozone countries must keep their budget deficits below 3%.
In order to achieve this the new federal, regional and language community governments will have to make herculean efforts. According to the Federal Planning Bureau’s figures a deficit of 4.5% is around 31 billion euro, while a 5.8% deficit amounts to 40 billion euro.
The Planning Bureau economist Michel Saintrain warns that there are still a number of uncertainties that could impact the accuracy of the forecast. For example, the eventual financial consequence of the deal that the outgoing federal government struck with the energy company Engie to prolong the working life of two nuclear reactors beyond 2025.
Growth and inflation
The Federal Planning Bureau forecasts that between now and 2029 economic growth will remain stable at around 1.4% of GDP. At the end of the year the annual inflation rate will be 3.1%. During the course of next year annual inflation will fall to below 2%.