Flemish budget deficit could be 10 times larger than planned due to COVID-19 crisis
The COVID-19 will cost the Flemish Exchequer at least 4 billion euro this year. The Flemish budget deficit could end up being 10 times higher than had been originally estimated.
The COVID-19 crisis is not only an issue of public health, it also has and indeed will have economic implications in Flanders, Belgium as a whole, Europe and the rest of the World. In new budget projections announced by the Flemish Government, the COVID-19 crisis threatens to set the Flemish exchequer back to the tune of at least 4 billion euro.
When the new Flemish Government was formed last year it was agreed that the Flemish budget would be allowed to go just over 400 million euro into the red this year. However, the measures already taken by the Flemish Government to address the economic impact of the COVID-19 mean that the 2020 budget deficit will be much greater than this.
In addition to the 2.5 billion euro already spent on measures to protect the Flemish economy, the Flemish Government also expects revenue to fall by 1 billion euro as the economy shrinks.
This means that this year’s deficit could end up being 4 billion euro, ten times the amount originally projected.
The Flemish Budget Minister Mathias Diependaele (nationalist) warns that the deficit could be greater still if the economy shrinks even more than his department has predicted in its projections.
Mr Diependaele told VRT News that “We made our projections based on around -1% economic growth. However, since Wednesday the Federal Planning Bureau and the National Bank have been telling us that this could reach -8%. If that were the case than we would have another billion less in income”.
Balanced budget in 2021?
The Flemish Government had wanted publish a balanced budget for 2021. However, this will now appears to be something of a tall order.
"We need to go flat out to limit losses as much as possible and to really think about how we can develop policy the economy. This is the task we face during the coming weeks. Up until now we have been working to manage the crisis. The next step is to look at how we can get the economy up and running again as quickly as possible within the framework of the safety measures that are in force. The longer we wait, the further we will go into the red and this is what we absolutely need to avoid”, Mr Diependaele said.