Fiscal Consolidation in Belgium: How Much and by What Means?

Selected Issues Papers, December 19, 2023

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Fiscal Consolidation in Belgium: How Much and by What Means?

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Bibliographic details

• Authors: Yu Ching Wong
• Published: December 19, 2023
• Series: Selected Issues Papers
• DOI: https://doi.org/10.5089/9798400264283.018

Key findings on fiscal position and need for consolidation

• Belgium is facing higher structural deficits and rising debt after the pandemic and energy crisis.
• Fiscal consolidation is needed to:
  • lower inflation,
  • rebuild buffers,
  • reduce debt, and
  • preserve Belgium’s social contract.
• An ideally front-loaded and significant adjustment to achieve a medium-term structural balance would reduce public debt towards the 60 percent debt threshold, significantly reducing vulnerabilities.
• Experiences in other countries and in the past in Belgium show that while ambitious, such an adjustment is achievable.

Recommended composition of consolidation measures

• Core areas to target:
  • rationalizing and increasing the efficiency of social benefits,
  • reducing the public wage bill.
• All federal entities should share the burden of the adjustment, in a coordinated manner, with accountability at all levels of government.
• Comprehensive spending reviews would help target budgetary saving.
• The consolidation should be set within a credible and clear multi-year consolidation plan.

Implementation priorities and governance

• Coordination across federal entities is essential.
• Accountability mechanisms should be established at all levels of government.
• A clear multi-year consolidation plan enhances credibility and implementation.

Mitigating near-term growth impact and boosting potential growth

• To mitigate the growth impact in the near term and boost potential growth:
  • public investment should be preserved,
  • the adjustment should be accompanied by structural reforms to increase labor force participation and productivity.

Publication and metadata

• Author: Yu Ching Wong
• Publication date: December 19, 2023
• Pages: 20
• Volume: 2023
• Issue: 064
• Series: Selected Issues Paper No. 2023/064
• DOI: https://doi.org/10.5089/9798400264283.018
• Stock No: SIPEA2023064
• ISBN: 9798400264283
• ISSN: 2958-7875
• Subjects: Expenditure, Fiscal consolidation, Fiscal policy, Fiscal stance, Government debt management, International organization, Monetary policy, Public debt, Public financial management (PFM)
• Keywords: budget, categories Between Belgium, deficit and debt, Europe, federal and subnational public finances, fiscal consolidation, fiscal consolidation in Belgium, fiscal consolidation path, fiscal federalism, Fiscal policy, Fiscal stance, Global, Government debt management, government expenditures, major spending category, social contract

Source: IMF Selected Issues Paper — “Fiscal Consolidation in Belgium: How Much and by What Means?” (December 19, 2023).

Content in this bundle

• 1. The Twin Crises Have Worsened Public Finances
  • 1. The Twin Crises Have Worsened Public Finances (Markdown version)
  • 1. The Twin Crises Have Worsened Public Finances (PDF)