## IMF Executive Board Concludes 2022 Article IV Consultation with Belgium _IMF News, March 2, 2023_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2022 Article IV Consultation with Belgium](https://www.imf.org/en/news/articles/2023/03/01/pr2354-belguim-imf-executive-board-concludes-2022-article-iv-consultation-with-belgium) ## Other formats - [Markdown version](/en/news/articles/2023/03/01/pr2354-belguim-imf-executive-board-concludes-2022-article-iv-consultation-with-belgium/index.md) - [Structured JSON version](/en/news/articles/2023/03/01/pr2354-belguim-imf-executive-board-concludes-2022-article-iv-consultation-with-belgium/index.json) - [Bundle manifest](/en/news/articles/2023/03/01/pr2354-belguim-imf-executive-board-concludes-2022-article-iv-consultation-with-belgium/bundle-manifest.json) ## Bibliographic details - Published: March 2, 2023 --- ### Macro outlook and near-term projections - Growth is expected to slow from 3.0 percent in 2022 to 0.2 percent in 2023, before returning to potential of 1.2 percent over the medium term. - Inflation should decelerate from 10.3 percent in 2022 to 5.5 percent in 2023, as energy prices ease. - Risks are tilted to the downside, related to escalation of the war in Ukraine and a sharper-than-expected tightening of financial conditions. - Lower energy prices would reduce fiscal pressures, and with progress on structural reforms before elections in 2024, boost confidence. ### Fiscal outlook, debt, and structural balance - With aging and social-benefit pressures and in the absence of adjustment measures, the structural fiscal deficit is expected to remain elevated over the medium term at 5½ percent of GDP. - High public debt will also rise to about 120 percent of GDP in 2028, increasing vulnerabilities. - Fiscal response to energy shock increased the fiscal deficit in 2022 and 2023 due to timely and substantial support to households and firms. ### Labor market, competitiveness, and indexation - Labor market has remained tight, with record-high job creation and low unemployment. - Indexation has opened a wage gap with key trading partners, posing challenges for competitiveness. - Directors encouraged the authorities to consider revising the wage indexation framework once inflationary pressures subside. - Directors recommended additional measures to facilitate labor reallocation, including enhancing labor market flexibility and incentive setting in the social security and pension systems. ### Financial sector and macroprudential stance - A resilient financial sector is facing challenges from the weaker macro-financial environment. - Directors concurred that financial sector policies should balance ensuring adequate credit provision, preserving resilience, and facilitating deployment of buffers to absorb losses when needed. - Given rising interest rates and the slowing economy and housing market, close monitoring of financial stability risks was recommended. - While most Directors supported the authorities’ near-term hold on additional macroprudential policy tightening, some Directors considered that further tightening could be desirable, as long as macro-financial conditions allow. ### Structural reforms and climate/energy policy - Some important structural reforms took place in 2022. - Directors emphasized that further labor and product market reforms are key to improve productivity and competitiveness and reinvigorate growth. - Pension reforms are critical for Belgium to receive the Next Generation EU funds. - Directors agreed that reaching ambitious climate goals requires a wider set of initiatives and greater focus on coordination and execution, including aligning national climate policies with more ambitious EU targets and considering raising carbon pricing. - Significant new investments in renewables to enhance energy security were welcomed. ### Executive Directors’ fiscal policy recommendations - Implement a credible and ambitious multi-year, expenditure-led fiscal adjustment, drawing on spending reviews, to: - put debt on a declining path, - replenish buffers, - complement monetary policy in curbing inflation. - Rationalize current spending while increasing productive public investment. - Ensure energy support measures remain limited and temporary, be better targeted, and maintain price signals. - Improve coordination of spending across government levels. - Continue initiating tax reforms and enhance public investment management. ### Key statistics (Table 1: Belgium: Selected Economic Indicators, 2021-23) - Real GDP: 6.1 (2021), 3.0 (2022), 0.2 (2023 Proj.) - Domestic demand: 5.6 (2021), 2.8 (2022), 0.9 (2023 Proj.) - Foreign balance1/: 0.6 (2021), 0.3 (2022), -0.6 (2023 Proj.) - Exports, goods and services: 11.3 (2021), 4.7 (2022), 1.1 (2023 Proj.) - Imports, goods and services: 10.7 (2021), 4.4 (2022), 1.9 (2023 Proj.) - Potential output growth: 3.9 (2021), 1.8 (2022), 1.2 (2023 Proj.) - Output gap (in percent): -0.5 (2021), 0.7 (2022), -0.2 (2023 Proj.) - Unemployment rate (in percent): 6.3 (2021), 5.5 (2022), 6.0 (2023 Proj.) - Consumer prices: 3.2 (2021), 10.3 (2022), 5.5 (2023 Proj.) - GDP deflator: 2.9 (2021), 5.7 (2022), 5.0 (2023 Proj.) - Revenue: 49.9 (2021), 49.4 (2022), 50.8 (2023 Proj.) - Expenditure: 55.5 (2021), 54.2 (2022), 56.3 (2023 Proj.) - General government balance: -5.6 (2021), -4.8 (2022), -5.5 (2023 Proj.) - Structural balance: -5.1 (2021), -5.3 (2022), (2023 Proj.) -5.3 - Primary balance: -3.9 (2021), -3.3 (2022), -3.8 (2023 Proj.) - General government debt: 109.2 (2021), 106.8 (2022), 108.1 (2023 Proj.) - Goods and services balance: 0.4 (2021), -4.0 (2022), -3.5 (2023 Proj.) - Nominal GDP (in billions of euros): 502.3 (2021), 547.0 (2022), 575.9 (2023 Proj.) - Population (in millions): 11.6 (2021), 11.7 (2022) *From Press Release No. 23/54 — IMF Executive Board Concludes 2022 Article IV Consultation with Belgium.* --- ## References - [Belgium and the IMF](http://www.imf.org/external/country/BEL/index.htm) - [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2023/03/01/pr2354-belguim-imf-executive-board-concludes-2022-article-iv-consultation-with-belgium_