Total budget deficit expected to be 6.2 billion euro less than first predicted
The combined deficit of Belgium’s federal, regional and language community governments and local authorities is expected to be 6.2 billon euro lower this year than had initially been forecast. The revised budget deficit forecast was released by the Budget Monitoring Committee on Thursday. According to the new calculations, Belgium’s 6 governments will finish this year with a total deficit of 27.4 billion euros in 2023. This is 4.8% of GDP. Although the figures way above the ECBs long-standing target of a maximum of a deficit not exceeding 3% of GDP they are still 1.1% of GDP (6.2 billion euro) lower than had been originally estimated.
According to the new forecast, the federal government will record a deficit of 20.5 billion euro this year which is around 3.2 billion euro better than originally forecast. The language communities, regions and local authorities are expected to clock up a total budget deficit of 6.7 billion euro this year, 2.8 billion euro less than initially forecast.
The Budget Monitoring Committee says that the deficit forecast has been revised down due to factors such as lower inflation and energy prices which mean less expenditure on support initiatives such as the social energy tariff.
Despite the relatively good news, action is still needed to reduce the deficit. If current policies remain unchanged, the combined deficit will rise to 41.6 billion euro or 6.1% of GDP by 2028. Belgium’s combined public debt is estimated to be 106.4% of GDP this year. If policies remain uncharged this will rise to 117.6% of GDP by 2028.
European budget rules require that the deficit does not exceed 3% and the national debt does not exceed 60%. Member states with a higher debt ratio must take action to reduce public debt. After a suspension due to the coronavirus pandemic and the energy crisis, these rules will come into force again next year.
The Monitoring Committee is made up of a group of top-ranking officials that review the country's budgetary situation in the run-up to a budget review. The Federal Inner-Cabinet started work the budget review today (Friday 17 March) at a meeting at which the Chair of the Monitoring Committee was also present.