‘Extra defence spending will need to be offset by savings or extra revenue'

Belgian budget minister Vincent Van Peteghem says Belgium should respond to calls to boost the defence budget to 2 per cent of GDP soon, but he does not want to ignore existing budget targets completely. Meeting the NATO target sooner, partly within existing norms will require additional savings or other ways of generating cash.

Belgium currently spends a paltry 1.3 per cent of Gross Domestic Product (GDP) on defence, while the NATO target is 2 per cent. That is what Belgium wants to achieve as soon as possible.  It will require additional savings of about 4 billion euros per year (up to 12 billion in total) in coming years. The EU allows member states not to include such spending in calculations on reaching the EU’s budget targets, but Mr Van Peteghem is not keen on that idea.

‘Just because the EU says we can keep the extra effort outside the budget tables does not mean we should,’ Mr Van Peteghem says. ‘Because any spending we do now will be added to our national debt, which is already extremely high. So we are going to have to offset it.’

The minister believes selling government assets including holdings possibly in banks Belfius and BNP Paribas should be considered as well as income from frozen Russian assets.

The budget minister is also eying additional efforts by the federated entities, Brussels, Flanders and Wallonia, as well as additional savings efforts. He also wants to look at corporation tax revenues. Mr Van Peteghem mentioned a figure of €17.2 billion over four years, between now and 2029.

The minister did not want to comment openly now on where the additional savings should come from. This could result in some tough discussions within the government in the near future, in times when the budgetary situation is already difficult. Mr Van Peteghem said the tax reforms promised to leave wage earners with more in their pocket after tax would survive unscathed.